Coming off what is traditionally considered the kickoff to the holiday shopping season, this week’s jobs data will likely be the lynchpin for economic hopes. Another month of lower than expected job losses would probably provide the soothing balm that the market is looking for following the apparently knee jerk reaction to the news out of Dubai last Friday.
Following the headlines that Dubai World was facing debt issues, light holiday volume delivered a drop in the market. However, the market did close in the top half of the range, something technicians may see as a bullish signal. The S&P has already moved back above 1100, possibly trying to hold court above 1130 ahead of the jobs number – something that will make or break the near term direction.
If the official government report comes in close to expectations, look for the market to continue rally to the end of the year. If actual losses are a lot worse than forecasted, the data could put the brakes on the market right now. Today’s ADP number could lower expectations, coming in with more job losses than estimated by Reuters surveys – 169,000 vs. a forecast for 155,000.1
Employment is not the only data on tap this week. Weaker construction spending data provided a bit of drag on enthusiasm, coming in flat for October and revised lower for September.2 Pending home sales data showed the ninth month of gains – likely on the weight of the tax credit incentive for buyers – something which may provide an improved horizon for the housing sector.3 Another upbeat tune came from the ISM manufacturing index. Even though it fell to 53.6, it remained above 50, the area considered indicative of growth.4
The US dollar appears to still be under pressure as well, helping to fuel gains in commodities and equities markets. Until fundamentals for the dollar improve it is likely to be the same old story. Crude oil also appears to have the potential to break out to the upside. Barring any fundamental landmines or surprises like Dubai World, these markets appear set to continue their trajectory until the end of the year.
1 http://www.reuters.com/article/newsOne/idUSTRE5B12QN20091202
2 http://www.marketwatch.com/story/us-construction-spending-flat-in-oct-2009-12-01
3 http://www.forbes.com/feeds/ap/2009/12/01/business-general-industrials-us-homebuilders-sector-snap_7173583.html
4 http://www.marketwatch.com/story/ism-fades-to-536-still-signals-expansion-2009-12-01-10800
Past performance is not necessarily indicative of future results.
Past performance is not necessarily indicative of future results.
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