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The Dow Futures Report

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Equities gain as good data triumphs over evil employment outlook

Thu, Apr 2 2009, 10:42 GMT
by Paul Brittain

Alaron

EQUITIES BEGIN 2 ND QUARTER WITH GAINS. BETTER DATA ON HOUSING AND MANUFACTURING TRUMPS ADP REPORT, LOOMING US AUTOMAKER BANKRUPTCY.

US Equities began the 2 nd quarter of 2009with a solid performance that overcame early adversity driven byominous data releases. The major equity indices remained under pressurethroughout the overnight session after sentiment dropped due tocomments from the Obama administration that bankruptcy might be theviable outcome for General Motors and/or Chrysler. A slew of bad datafrom the Euro zone kept equities under pressure throughout theovernight session. A brief pre market rally was cut short by therelease of the ADP employment report, which tracks jobcreation/destruction in the private sector. The reading came in at ahigher than expected -742,000 vs. previous reading of -697,000.

It would appear though that market sentiment had become used to worsethan expected bad news with regards to the employment picture.Perception also appeared to be building a longer term view into theemployment picture as a gleam of optimism was found in Tuesday’s USConsumer Confidence reading on future outlook for jobs.

The leveling off of job loss shock allowed for a recovery in equitiesfueled by better than expected reading from the ISM manufacturingsurvey and US pending home sales. Both of these indicators showedimprovement over the previous month and allowed for a renewed sense ofoptimism on the economy. Material and Financial stocks led the indiceshigher. Bank stocks were particularly buoyant today on expectation ofan announcement from the Financial Accounting Standards Board regardingmark to market accounting.

One sector that did not fare well was not surprisingly the auto sector.General Motors fell, but recovered from its session lows after proposedplans by the Obama Administration for a “controlled bankruptcy”Overall, it would seem that this bad news for GM Shareholders-the oneswho have not been playing this as a speculative penny stock-could beperceived as a positive note for the market, as the notion that “a badending is better than no ending at all”

Technically, June Dow Futures staged a nice rebound off an initialsupport level of 7430. The market continues to experience volatilitywithin its range. Holding within this range should allow for upwardrally to 7960 resistance level. Support should be found at the 7550level.

Published on  Thu, Apr 2 2009, 12:10 GMT