Despite the expectations of post-correction market rally the weaker unemployment report of 49,000 job loss and 5.5 unemployment rate the U.S stock markets point to lower and weaker open this morning comments Alfred E. Goldman, Chief Market Strategist at Wachovia Securities.
You talk about a wall of worry and how bull markets climb it - we surely had an example of that yesterday. Oil was up over $5.80 a barrel, the dollar was down and both Ambac (2.62,ABK) and MBIA (6.04,MBI) had their AAA ratings cut to AA. Despite all this bad news, the popular market averages rose sharply and the A/D was 4:1 positive on issues and 5:1 on volume. Energy stocks led the parade, tech had yet another good session and even banks and brokers rallied.
After three days of correction/consolidation the market was entitled to a rally but yesterday's action was a bit extreme. The good market action showed a continued positive supply/demand ratio for stocks but also probably the market overdid it and will settle back a bit out a few days. Sidelined cash and shorts had to lose sleep last night and will be another source of demand for stocks.
Today - the employment report showed a drop of 49,000 new non-farm jobs, better than expected but the bad news was a jump in the unemployment rate to 5.5%. Oil is up and the dollar down, not good for stocks. The opening looks lower.
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