Market Talk

So now that the U.S. — apparently, at least judging by the market’s reactions last week — isn’t a concern anymore, the markets are turning once again to Europe. Funny how these things work, isn’t it?

Weakness in European stock markets and declining euro contribute to a moderately negative premarket tone for US stocks as this holiday shortened week gets underway.

More discussion about the lack of real stress in Europe’s bank stress tests has added some edginess to the mood. Slow week for US economic data, nothing of note due today. Fed’s Beige Book and July consumer credit both out tomorrow afternoon.

Investors retreating from last week’s full-on risk embrace, oil futures dipping back below $73/barrel, EUR/USD recently at $1.275 after climbing above $1.29 last week. USD index up 0.7% at 82.58.

S&P futures down 5.50, DJ futures down 42. Ten-year note rebounds, yield back down to 2.65%.

US stocks rally again, extending equities’ winning streak, after August jobs report comes in better than feared.

DJIA jumps 128 (1.2%) to 10448, its fourth consecutive gain. Those gains, incidentally, almost totally wiped out August’s loss. S&P 500 rises 14 (1.3%) to 1105, surging sharply, but getting capped around the 100-day moving average. Nasdaq Comp gains 34 (1.5%) to 2234. NYSE volume at 3.5B shares traded is low, but that should be expected ahead of a the three-day Labor Day weekend.

It’s the best three-day showing to open a month since March 2009, a month that lives warmly in many a bull’s heart. Whether the rest of September will replicate March ‘09 remains to be seen, but traders are going to at least have a nice holiday weekend to savor it.

Still, stocks haven’t broken out of their trading range, yet. The risk trade got a big boost this week, with a few data points coming in better than expected. Whether that’s a blip or some kind of near-term bottom is the question. In all the euphoria, the stock market almost completely ignored this morning’s ISM services index, which showed a rather distressing slide and on which John has a separate post.

Don’t forget, Mouseketeers, there’s a big difference between better than expected and good. This morning’s jobs report was not good. It was better than expected. The stock market may not care about that difference, but you should.

ISM services index? That come out today?

Peculiar that the stock market today so easily dismissed a worse-than-expected August ISM non-manufacturing report.

Not a big surprise that ISM services weakness is overshadowed by better-than-expected payrolls report, but the complete disregard for this stinker seems a little odd.  

After August ISM manufacturing’s upside surprise Wednesday, the Dow Industrials busted a 250-point move higher, with economists and other pundits quick to suggest the better-than-expected data should shelve any concerns about a double dip.

The fact that several regional manufacturing reports earlier in the month reported starkly different information was given little heed. “The contraction seen in some regional manufacturing surveys in August seems not to have been representative of the national manufacturing sector, as the ISM production index remains above-trend and the employment index was the highest since 1983,” Barclays Capital said this week.

Cut to today – the ISM services sector August gauge falls to 51.5 from 54.3, its lowest level since January and just a point and a half from slipping into contraction territory. The market flinched, juked and jived, but ultimately steadied and frolicked with the frisky euro again.

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So, that’s jobs report was “better than expected,” but was it actually good? No, but not as bad as feared seems to be enough for the market, for now.

Positive tone carries on for stocks around the globe as most Asian markets saw gains overnight and European markets are currently rising moderately.

US stock futures subdued premarket in anticipation of the August payrolls report, due at 8:30 a.m. ET. Economists look for the shedding of 110,000 jobs, mainly dismissed Census workers, offset perhaps by some anemic increase in private payrolls. Prior months’ revisions should be interesting, and curious to see if the labor force continues to contract, the key factor that’s kept the unemployment rate steady since the spring.

ISM August non-manufacturing index due at 10:00 a.m., and then look for the crowd to thin into the holiday weekend.

S&P futures down 1.60, DJ futures down 10. Ten-year note lower, yield at 2.64%.

US stocks rise for a second session, albeit not as sharply as during yesterday’s rally, as another batch of economic data gives some hope to the bulls.

DJIA rises 51 (0.5%) to 10320, S&P 500 gains 10 (0.9%) to 1090, Nasdaq Comp up 23 (1.1%) to 2200. NYSE volume’s low.

Today, it was a better-than-expected report on pending home sales that the bulls seized on. Jobless claims remain disturbingly high as 472,000, but no matter there’s a rally on. Dell bows out of 3Par sweepstakes after H-P raises its bid to $33/share.

Of course, what really matters is tomorrow morning’s monthly jobless report.

Stocks aren’t seeing any follow-through today from yesterday’s rally, and while the session isn’t over, how the markets react after that rally will tell you everything you need to know about how “real” the rally itself was.

Meanwhile, there’s more M&A news, with H-P once again upping its bid for 3Par. Also, gold is back around its record closing price of $1,257 (currently at $1.253.90.)

That’s what we’re talking about on the Markets Hub.

US stock futures essentially flat on the heels of yesterday’s spike higher. European markets roughly flat, after the continent’s own scorching rally yesterday, while Asian stocks posted strong gains overnight.

As noted premarket yesterday, Wednesday’s action isn’t uncommon in a new month’s early days, and as we’ve seen lately, both rallies and sell-offs can come and go in the blink of an eye.

Weekly jobless claims, revised 2Q productivity and labor cost gauges both due at 8:30 a.m. ET; July pending home sales, and factory orders both out at 10:00 a.m. August chain-store sales reports also roll throughout the morning.

S&P futures up 0.20, DJ futures up 1. Ten-year note lower, yield at 2.59%.

US stocks burst out of the gate in September, with the DJIA posting its best one-day gain since early July after a key gauge of the manufacturing sector shows surprising strength.

DJIA surges 255 (2.5%) to 10269, its biggest one-day gain percentage-wise since July 7. S&P 500 jumps 31 (3%) to 1080, Nasdaq Comp rises 63 (3%) to 2177. NYSE volume is 4.5B shares traded, not bad volume for a session a couple days ahead of Labor Day.

Stocks rose sharply early, as traders were apparently emboldened after the S&P held the 1040 level again yesterday. But the ISM reading, coming in not just better-than-expected but actually better, was like rocket fuel. September has a reputation for being a bad month for stocks, but it also often starts off well. It did today.

Now, that lede (newspaper jargon for “lead,” the top of the story, not  be confused with lead, the material they used to use to fill the letter blocks when printing the paper,) I wrote is without a doubt a concise, accurate assessment of today’s session, if I do say so myself. However, I find it hard to believe this rally was built on anything more lasting that Friday’s rally, which had just about completely melted away by yesterday’s closing bell.

Briefly, let’s look at some of the news today. There was that Chinese PMI story. China’s official PMI rose to 51.7 from 51.2. That sparked the global stocks rally. Now, that’s a very minor move, one that still leaves the index too close to the 50 level for comfort in a diffusion index that measures not actual change but the rate of change.

Still, with the proverbial new money pouring into the market, that was enough to get things going. The market totally ignored a trio of private-sector takes on the jobs market, the ADP, TrimTabs and Challenger Grey reports. ADP said private-sector jobs fell 10,000, TrimTabs said it was down 65,000. The Challenger report was actually bullish, they said job cuts fell to a decade low. Still, those first two do not presage a good number Friday when the BLS reports the nonfarm payrolls. But no matter, because the ISM’s take on US manufacturing came in at 56.3, up from 55.5, when it was expected to slide to 52.

What makes it so surprising is that absolutely everybody expected it to fall, given that the regional Fed surveys have been uniformly depressing. So, is the ISM number a one-off or some counter-trend? I just don’t know yet, but I’m very suspicious of the ISM number. It just doesn’t fit in with anything else we’ve been seeing.

Lastly, we’ll leave you with this, a tidbit that John pointed out to me just now. As bad as August was for stocks, May was that much worse, with the DJIA losing better than 8%. What’d the Dow do on the first trading day in May? It rose, about 143 points. Over the next four sessions, it lost 771 points, a time frame that included the now-infamous Flash Crash.