When stocks go up more than 2% on Wednesday and hold on to those gains on Thursday, it says a lot about the strength of the market. When America keeps on adding jobs despite economists whingeing about how a slowdown is coming, it says a lot about the strength of the economy. Put those two things together, and it makes people want to buy. No, it's not surprising that stocks are set to move higher this morning. Not after the jobs report showed that 378,000 got added in December -- 166,000 more than economists expected. Not after the unemployment rate slipped to 4.3% from 4.4% when economists expected it would climb to 4.5%. The economy is doing just fine, thank you.
"There's a lot of strength out there," said Bill Allyn, head of block trading at
. "Don't sell America short. The consumer is alive and well, and our economy is doing fine even though the pundits are trying to talk the thing down. Couple that with the amount of money out there in 401(k)s and so on, and this makes for a lot of power."
Even before the jobs report came out, stocks looked set to head higher -- not surprising when one considers that Wall Street hung in there even though it had to digest not only Wednesday's big move, but trouble in Brazil and
permabull Abby Joseph Cohen shaving a bit off the stock allocation in her model portfolio.
At 9 a.m. EST, the
futures were up 7.9, more than 7 above fair value and indicating a hop at the open.
In the bond market, of course, it was a different story. The notion that the
would be cutting rates anytime soon was laid to rest this morning. The real damage was in shorter-term paper. While the 30-year Treasury was down a scant 7/32 to 100 4/32, lifting the yield to 5.24%, the yield on the 2-year climbed to 4.69% -- back where it was before the Fed started cutting rates this fall.
Declines in the yen during the Tokyo session put pressure on Japanese stocks, with global blue-chips like
taking the brunt of it. But in what has been a global trend, semiconductor stocks improved as the notion that chip prices have bottomed takes hold. The
shed 144.75, or 1.1%, to 13,391.81.
Hong Kong ended slightly higher in a choppy session that saw stocks gain nearly 2% before crashing back down. The
edged up 29.13 to 10,722.70. After the market closed, the
Hong Kong Association of Banks
announced a quarter-point cut in deposit rates to 4%. Stocks rose through the week in anticipation of the cut, which some traders speculated would come in at a higher 50 basis points.
Impressed by Wall Street's ability to hold on to its gains yesterday and expecting a higher open in the U.S., European traders bid stocks higher. In Frankfurt, the
was up 110.53 to 5433.74. In Paris, the
was up 36.05 to 4266.72. In London, the
was up 87.8 to 6152.
Friday's Wake-Up Watchlist
Dow Jones Industrial Average
reported earnings of $1.18 a share, beating the
15-analyst consensus estimate of $1.06 a share.
announced an accounting change that will result in a one-time after-tax gain of $1.3 billion, or about 97 cents a share, in the quarter ended Dec. 31. The modified accounting method and the adoption of new retirement provisions are expected to result in additional net income of about $170 million in fiscal 1999.
said it expects fourth-quarter earnings to top the penny a share expected by Wall Street analysts.
expects reduced revenues in the fourth quarter vs. the third quarter, and to report a net loss for the fiscal year ended Dec. 31. The expected net loss for the year will come as a result of extraordinary charges in the third quarter, as well as lower net income for the fourth quarter.
FactSet Research Systems
set a 3-for-2 stock split.
Morgan Stanley Dean Witter
to strong buy from neutral.
said combined revenue for November and December rose 23% compared to the year-ago period.
Morgan Stanley upgraded
to strong buy from outperform.
The often off-the-mark Inside Wall Street column in
this week offers up bullish articles on
. This week's column also mentions
, which provides secured commercial loans to small and midsize companies, as being on the prowl for acquisitions. Yesterday, Finova was in the news when it said it will buy
, a specialty finance company, for about $379 million in stock.