Investor sentiment was given a boost after the closing bell yesterday when Bank of America announced it will be paying back $45 billion in TARP funds. Two hours before this morning’s opening bell, equity futures are pointing higher after yesterday’s mixed session.
The Dow looks to open 30 points higher at 10,469 and the S&P 500 points up 3.50 points at 1,112.
Meanwhile, Spot Gold is trading 73 cents higher at $1,216.43 per ounce after setting a new record high of $1,226.10 earlier in the day, and WTI Crude oil is up 52 cents at $77.12 per barrel.
With commodities higher, it will come as no surprise that the the US dollar is nearing the 16-month lows seen last week.
Key Events Today:
8:30 ― Jobless Claims fell 35k last week to their lowest level since early September 2008. The number of initial claims ― 446k ― has not been seen since Lehman Brothers collapsed and triggered a global sell-off. For the week ending Nov. 28 economists expect to see 485k claims, more than the prior week but below the psychologically important 500k level. It’s worth noting that Thanksgiving could skew the data though. “Seasonal adjustments” attempt to take account of this but calculations can’t be perfect. Any number well off the consensus charts will likely be dismissed as a blip.
Analysts from RDQ noted, “We view the decline in initial jobless claims in the third week of November to be partly a function of aggressive seasonal adjustment factors (seasonally adjusted claims fell by 35,000 but unadjusted claims increased by 68,000) and we look for claims to have rebounded to 480,000 in the week ending November 28th (this is the week that includes the Thanksgiving day holiday). The realization of our forecast would result in the four-week average of claims falling 8,500 to 488,000.”
8:30 ― Productivity continues to climb and labor costs continue to fall, according to the Q3 Productivity and Costs report on November 5. Revisions are expected to trim the +9.5% productivity surge to +8.6%, while the -5.2% cut in unit labor costs is expected to become a less dramatic -4.2%. If forecasts are right, the numbers will be of interest to specialists but for the average person the report will be of little significance as the trends are the same.
“Based on downward revisions to nonfarm gross value added in Q3, we expect the BLS to revise productivity growth down to 8.0% q-o-q ar from 9.5%,” said forecasters from Nomura. “As a result, we think unit labor cost growth is likely to be revised down to -4.0% from -5.0% previously.”
10:00 ― The ISM Non-Manufacturing Index has been growing for two months but its signs aren’t pointing to a healthy economy just yet. Nine industries were growing but seven were in decline and two were in unchanged, its October report said. In November the headline is set to rise from 50.6 to 52.0, and many sets of eyes will be looking to see if the employment component stays positive after its surprise jump into the black last month.
Analysts from IHS Global Insight agree with the consensus forecasts but are not optimistic in the medium term. “Freight activity has been picking up slowly, and there should be less downward pressure on employment levels in November. Financial markets continue to improve, ” they wrote. “However, momentum behind orders appears to be stalling out.”
