Stocks head for rebound ahead of jobs report
Wall Street anticipated a dreadful jobs report Friday, but seemed to believe the bad news is already priced into the market. Stock futures rose ahead of the market's open.
Investors expect the Labor Department, due at 8:30 a.m. Eastern time, to report that employers cut 200,000 jobs in October - more than September's 159,000 loss, which had been the largest in more than five years. Wall Street also expects the unemployment rate to rise to 6.3 percent from 6.1 percent, according to the median estimate of economists surveyed by Thomson/IFR.
When people lose their jobs, they tend to pare back family budgets and fall behind on their debt - not a good prospect for an economy suffering a simultaneous credit crisis and spending slowdown.
And stock futures did pare their gains after some grim signals from the auto industry - one of the hardest hit by the financial crisis. Ford Motor Co. said it lost $129 million in the third quarter after burning through $7.7 billion in cash, and said it is cutting 10 percent of its North American salaried work force. Analysts expect General Motors Corp.'s quarterly results to be abysmal as well.
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But many investors are betting that most bad news is baked into the market already - the Dow Jones industrial average and other major indexes have shed about 10 percent since the election of Barack Obama to the White House, an event that was preceded by a big rally.
Ahead of the market's open, Dow Jones industrial futures rose 80, or 0.92 percent, to 8,780. Standard & Poor's 500 index futures added 11.70, or 1.29 percent, to 916.20, and Nasdaq 100 index futures jumped 28.50, or 2.30 percent, to 1,269.00.
On Thursday, Wall Street suffered its second straight day of massive losses - this time set off by Cisco Systems Inc.'s warning about waning demand and by retailers posting dismal sales figures for October.
On Friday, the dollar fell against most other major currencies, while gold prices rose.
Light, sweet crude rose $1.50 to $62.27 a barrel in premarket trading on the New York Mercantile Exchange.
In Asian trading, Japan's Nikkei index fell 3.55 percent, and Hong Kong's Hang Seng Index rose 3.29 percent. In morning trading in Europe, Britain's FTSE 100 rose 1.89 percent, Germany's DAX index rose 0.93 percent, and France's CAC-40 rose 1.02 percent.
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(Copyright 2008 by The Associated Press. All Rights Reserved.)