Economics:
- 8:30 a.m. — The Bureau of Labor Statistics’ steaming enchilada of a jobs report arrives. The consensus calls for 60,000 new jobs total. FactSet Research estimates call for 90,000 private sector jobs. The unemployment rate is expected to stay at 9.1%.
- 8:30 a.m. — Wholesale sales data for August arrives. It’ll get lost in the jobs noise. But the consensus calls for 0.7% increase in inventories. In July, U.S. wholesalers stockpiled inventories, but sales were flat. Inventories rose 0.8% in July from the previous month, to a seasonally adjusted $462.41 billion. Sales, however, were unchanged from June, at $396.01 billion.
- 3 p.m. — Data on consumer credit for August arrives. The consensus calls for an expansion of $8 billion. Consumer credit rose $12 billion in July. The increase was driven by a jump in non-revolving credit, including car loans. But revolving credit, primarily credit cards, fell $3.4 billion, suggesting continuing caution among consumers. So keep an eye on that revolving credit number.
The ability to lower the stubbornly high unemployment rate remains one of the economy’s biggest challenges, but investors appear to be accustomed to a weak jobs market and are moving on.
Wall Street, in fact, is using two positive indicators, tepid though they may be, as reasons to take hope that unemployment at least isn’t getting any worse.
Friday’s jobs report, then, “will provide critical validation as to whether or not the economy is stalling in response to heightened economic uncertainty and financial market volatility. We do not expect this to be the case, because key metrics of activity (retail sales, auto production, jobless claims) have actually continued to improve as of late,” Deutsche Bank economist Carl Riccadonna said in a note to clients Thursday.
The analysis comes after the weekly jobless claims Thursday showed a less-than-expected gain to 401,000, while the monthly ADP report a day earlier indicated a gain of 91,000 private sector jobs in September.
Economists expect the nonfarm payrolls report to show a gain of 60,000, a number that probably will not move the unemployment rate lower and may even be an optimistic view of the jobs market.
Europe’s central banks have escalated dramatically their use of unconventional policy weapons in a bid to calm nervous financial markets and prevent the continent’s economies from sliding into recession.
The European Central Bank announced a further extension of its policy of providing unlimited liquidity to eurozone banks on Thursday, saying it would include 12-month loans this month and 13-month loans from December that will bridge two crucial year-end periods when banks are keen to show strong financial figures. It also unveiled a €40bn programme to buy so-called covered bonds – ultra safe investments issued by banks.
The S&P 500 now has a three-day rally, with an additional 1.83% today. The index is in the green for the week (and month) by 2.97%.
Year-to-date the index is in the red at -7.37% but 14.57% below the interim high of April 29.
From an intermediate perspective, the index is 72.2% above the March 2009 closing low and 25.6% below the nominal all-time high of October 2007.
Keep an eye on that 50 Day moving average of 1180 for resistance.