Market Mulling Jobs Data This Morning

The Labor Department reported no job growth at all for September.
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Stocks are trying to sort out a thoroughly mixed bag of employment data this morning.

The

Labor Department

reported no job growth at all for September. The agency said payrolls actually declined by 8,000 jobs in September, confounding economists in the

Reuters

poll who predicted 218,000 new jobs. The jobless rate stayed steady at 4.2%. But hourly wages gained 0.5%, two-tenths of a point higher than expected.

Focusing on the lack of employment growth, stock futures and bonds initially surged on the news, but then receded as the hourly-wage-gain figure sank in. At 9:05 a.m. the

S&P 500

futures were unchanged, a couple points above fair value and indicating a flattish open. The 30-year Treasury was lately up 5/32 to 99 11/32, putting the yield at 6.173%.

The stock futures "ran into an avalanche of selling up there" after soaring on the jobs report, said Chuck Farra, president of

Global Trading

in Chicago. "My gut feeling was that we weren't going to have a big move today, in terms of net change at the close. I still feel that way."

The Fed and the Employment Report: Join the discussion on

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Message Boards.

Great. With the

Fed

officially in a tightening mood, the negative jobs growth could be just what the bull market ordered, with what promises to be an extremely strong earnings season kicking off on Monday. But exactly how much that matters in the wake of

Hurricane Floyd, alongside the larger-than-expected wage gains, may take the market a while to figure out.

This morning, the biggest news on the earnings front is negative.

Xerox

(XRX) - Get Report

has warned that third-quarter earnings will fall short of expectations.

Overnight in Tokyo, with the U.S. employment report looming and Japanese markets closed Monday for a national holiday, traders weren't willing to take on too many long positions. The

Nikkei

fell 74.37, or 0.4%, to 18,062.18.

The dollar maintained its recent gains against the yen, trading between 107.9 yen and 107.2 yen overnight. The greenback was lately quoted at 107.49 yen.

Meanwhile, the size of Japan's economic stimulus package is taking firmer shape. Prime Minister

Keizo Obuchi

and

Economic Planning Agency

Director General Taichi Sakaiya both said that the supplemental budget would exceed 10 billion yen, a figure that was at the top end of expectations even before the unexpected 0.2% rise in Japan's second-quarter

gross domestic product

.

But the government's ruling coalition of the Liberal Democratic Party, Liberal Party and New Komeito are expected to press for an even larger stimulus package. The coalition yesterday bluntly pressed the

Bank of Japan

for a quantitative easing of monetary policy, with the policy chief of the LDP saying that a refusal by the BOJ to ease would be "just self-righteousness." The BOJ, which has hitherto resisted all such entreaties, meets next week on Wednesday.

Anticipation of today's jobs report kept stocks on a short leash in

Hong Kong

, where the

Hang Seng

lost 0.78 to close at 13,112.42. The benchmark index had traded within a narrow 100-point band through the entire session.

The big European indices were mixed on the heels of the jobs report. London's

FTSE

was off 10.9 to 6189.5, while the Paris

CAC

was off 29.39 to 4712.87. Frankfurt's

Xetra Dax

was down 28.15 to 5391.16.

Friday's Wake-Up Watchlist

By

Brian Louis

and

Tara Murphy

Staff Reporters

Xerox warned that it expects to post essentially flat revenue for the third quarter and to see about a 10% to 12% slump in earnings compared with the year-ago 53 cents a share. The

First Call/Thomson Financial

13-analyst consensus estimate called for the company to earn 58 cents a share in the quarter. Xerox blamed weaker revenue in combination with an unfavorable product mix and heightened competitive pressures.

Prudential Securities

lowered its rating on Xerox to accumulate from buy, while cutting its fiscal 1999 and 2000 earnings estimates to $2.42 from $2.57 a share and to $2.70 from $2.85 per share, respectively.

PaineWebber

also cut its rating on Xerox to neutral from buy.

Earnings/revenue reports and previews

(Earnings estimates are from First Call/Thomson Financial.)

Consolidated Papers

(CDP)

posted third-quarter earnings of 21 cents a share, well ahead of the 10-analyst estimate of 15 cents and above the year-ago 19 cents.

Ericsson's

(ERICY)

new handset models would lead to stronger fourth-quarter results compared with those in the second quarter and boost earnings in 2000, according to a

Reuters

report.

hi/fn

(HIFN)

, whose stock got crushed yesterday, said it expects to report fourth-quarter earnings above the five-analyst estimate of 37 cents. hi/fn said, after its shares were halted on the

Nasdaq Stock Market

, that after a 30% price decline, two major customers had sliced their specialty semiconductor orders for the fourth quarter.

SLI

(SLI)

warned it expects third-quarter earnings to come in between 20 cents to 25 cents a share, below the seven-analyst estimate of 35 cents. For the full year, before restructuring and other charges, the company expects to post earnings of between $1.36 and $1.46 a share, below the seven-analyst estimate of $1.72.

Retailers' September same-store sales were up, with discount chains in the lead, according to

The Wall Street Journal

. The newspaper reported that some analysts plan to up their earnings estimates for

Wal-Mart

(WMT) - Get Report

,

Dayton Hudson

(DH)

and

Costco

(COST) - Get Report

as a result of the strong sales.

Mergers, acquisitions and joint ventures

Volvo

(VOLVY)

is buying a 5% stake in

Mitsubishi Motors

of Japan and forming a strategic truck and bus alliance.

Offerings and stock actions

Aetna

(AET)

announced it plans to set a $1 billion share-repurchasing plan. Separately, another lawsuit against Aetna was filed yesterday in Mississippi federal court, claiming that the HMO denied participants care.

Genentech

(DNA)

said

Roche Holdings

plans to sell 20 million shares of Genentech stock in an underwritten public offering, which will represent 15.6% of the outstanding common stock of Genentech. Genentech also said its board approved a 2-for-1 stock split. In the wake of the planned offering, Roche's economic and voting ownership of Genentech will be trimmed to about 65%. In conjunction with the stock offering, Roche also plans to issue U.S. dollar-denominated bonds exchangeable with Roche for up to about 5.5 million shares of Genentech stock owned by Roche.

Credit Suisse First Boston

priced

Interwoven's

(IWOV)

3.2 million-share IPO above-range at $17 a share.

Donaldson Lufkin & Jenrette

priced

Jupiter Communications'

(JPTR)

3.1 million-share IPO above-range at $21.

K-Swiss

(KSWS)

set a $25 million share-repurchasing plan.

Bear Stearns

priced

TriZetto Group's

(TZIX)

4.2 million-share IPO at $9, the low end of the estimated $9 to $10 range.

Analyst Actions

Morgan Stanley Dean Witter

sliced its rating on

Merrill Lynch

(MER)

and

TD Waterhouse

(TWE)

to neutral from outperform. Morgan Stanley also downgraded

Schwab

(SCH)

to neutral from outperform.

Warburg Dillon Read

rolled out coverage of

Cytec Industries

(CYT)

with a buy rating.

Warburg initiated coverage of

DuPont

(DD) - Get Report

with a hold rating.

Warburg initiated coverage of

Engelhard

(EC) - Get Report

with a strong buy rating.

PaineWebber upped its rating on

Ferrellgas

(FGP) - Get Report

to a buy from attractive.

Morgan Stanley raised its rating on

Kennametal

(KMT) - Get Report

to outperform from neutral.

Miscellany

Ford

(F) - Get Report

and the

UAW

are still in talks to reach an accord before tonight's 11:59 p.m. strike deadline, the

Journal

reported. According to the newspaper, negotiations have been hindered by Ford's desire to spin off its

Visteon

parts division.

Mattel

(MAT) - Get Report

CEO Jill Barad told the company's board that she did not fully understand what was wrong at the company's

Learning Co.

division, but assured the board that she would produce a full accounting in the near future, the

Journal

reported.

The "Inside Wall Street" column in

Business Week

, penned by Gene Marcial, includes a bullish item on semiconductor assembly equipment maker

Kulicke & Soffa Industries

(KLIC) - Get Report

, which Scott Black, president of

Delphia Management

, says should double in 12 months.

Elsewhere in the column, Steve Kroll, a money manager at

Monness Crespi & Hardt

, loves casino stock

Boyd Gaming

(BYD) - Get Report

. He believes the stock is worth at least $20 and says it might become an attractive takeover target.

Finally, the column offers up a glowing piece on

ITT Industries

(IIN) - Get Report

.