Friday, December 2, 2011

STOCK RALLY FIZZLES: Here's What You Need To Know, December 2, 2011

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Friday, December 2, 2011

STOCK RALLY FIZZLES: Here's What You Need To Know

Sam Ro | Dec. 2, 2011, 4:00 PM | 386 | 1

A monster morning rally disappeared.

First, the scoreboard:

Dow: -0.6 pts, -0.0%
S&P 500: -0.3 pts, -0.0%
NASDAQ: +0.7 pts, +0.0%

And now, the top stories:

We got the November jobs report this morning, and analysts are still trying to decide whether it was good or bad. The unemployment rate dropped to 8.6% in November, which compares to economists' expectations for it remain unchanged at 9%. However, much of this decline is attributable to the drop in the labor force participation rate, which fell to 64.0% from 64.2%. U.S. companies added 120k nonfarm payrolls, missing the expectation for +125k. However, the good news is that nonfarm payrolls in the last two months were revised up. October payrolls was revised higher by 20K and September was revised higher by 52K.
When you take a step back, the U.S. labor market is still looking pretty bad. For one, the average duration of unemployment is historically high at 40.9 weeks. Also, the U.S. economy tends to recover most of the jobs lost since the beginning of a recession within two years. So far, it has been four years since the beginning of the last recession, and we are nowhere near having recovered those jobs.
The European Central Bank (ECB) is considering lending up to €200 billion to the International Monetary Fund (IMF), which in turn could lend to the debt-laden PIIGS countries, according to sources cited by Bloomberg. Markets rallied on the report. For now, we'll be waiting until December 9th, which is when EU leaders will be meet for their next big summit in Brussels.
Banks went bonkers today led by Morgan Stanley, which jumped 7.0%. JP Morgan increased 6.1%. Citigroup and Goldman Sachs also posted strong gains.
Western Digital, the hard disk drive maker hit hard by Thai floods, said it expects to generate $1.8 billion in sales during the quarter as it ramps up production. Analysts were expecting just $1.2 billion in sales. Shares jumped 7.5%.
Research In Motion, the maker of the BlackBerry smartphone, saw its share plummet 9.7% today. The company is taking a $485 million in pretax charges for an inventory revaluation related to its disappointing BlackBerry PlayBook tablet computers. The company shipped only 150k PlayBooks during its last quarter. As such, management now expects to miss its full-year earnings guidance of $5.25-$6.00 per share.
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