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Stocks reeling prior to Earnings Data - Money Matters for 10/05/05 Don Bravo | 10/05/05
After yesterday's selling spree, investors wasted little time in the continuing melee to move out of stocks. The Dow, Nasdaq and NYSE all opened in the red and stayed there throughout the session, with the selling accelerating into the close.
The 36 points lopped off the Nasdaq was the largest single day decline since April 15, 2005, when the index reached the low point of the year, closing at 1908.15.
Market internals were pretty horrid. Declining issues outnumbered advancers by a 4-1 margin and the new highs-new lows finally tumbled into the negative, especially on the NYSE, signaling more losses to come.
Taking a look back, that one-day bottom in April was the culmination of a tortuous mini-bear off the December 30, 2004 peak of 2178.34. Considering that today's close was nearly 200 points higher than that, there's either more pain to follow or quite a bit more resiliency in the US economy than anyone dares to imagine.
It could be the latter. Corporate profits due out in droves over the coming two to four weeks may be spotty at the worst. The effects of the hurricanes and a somewhat somnabulent economy may have more bark than bite. Oil trading seems to be indicating that the price of crude is still quite a bit higher than the market wishes to bear. Light crude was down over a dollar again today and is well off recent record highs.
Then again, the economy does have its share of problems and seemingly nobody willing to fix them. Traders may get a respite on Thursday as the only meaningful economic report will be initial unemployment claims which should be better than the 345,000 the market is expecting. With the hurricane carnage fading into memory, many who lost jobs have already filed, though it may be too soon to tell if there's a domino effect. If tomorrow's reading is under 325,000, it will give the markets some confidence heading into Friday.
The final day of trading for the week will start off with the Labor Department's monthly employment figures, which are forecast to show a loss of 150,000 - 200,000 jobs in September, mostly due to the ravages of the hurricanes in the Gulf Coast states. However, the way these unemployment figures have ramped up over the past couple of weeks, the markets could be blindsided by a figure 50% higher than that.
In that case, traders will be clawing over each other to sell anything and everything. The market being an unusually emotional animal, it will likely overreact to any more bad news.
With Monday a holiday, Friday could be especially volatile and juicy, depending almost entirely on the labor report. With that in mind, a small snapback tomorrow would not be unexpected.
BY THE NUMBERS
Dow Jones: -123.75; 10,317.36 close
NYSE Advancers: 604
Nasdaq Advancers: 599
NYSE New Highs: 73
Nasdaq New Highs: 83
Gold: 0.00; 469.30 close
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