Surprise, surprise, surprise. The
-esque action on Wall Street continued today as a unexpectedly benign employment report resulted in another unforeseen development: Both stocks and bonds failed to rally in a meaningful way.
Turned out the rumors circulating through Wall Street
yesterday about the "blockbuster"
employment report were spurious after all. The specious speculation yesterday damaged a bond market already reeling from comments by
. That, in turn, sabotaged stocks, especially high-tech issues.
Both asset classes mounted a decent advance early on after the
reported 234,000 new jobs were created in April, just slightly above the consensus estimate and vs. talk yesterday of a headline figure over 300,000. Average hourly earnings rose 0.2%, half as much as expected, while the unemployment rate rose to 4.3% from 4.2% in March, a 29-year low.
Equities were mainly in positive ground as lunchtime beckoned on Wall Street, but proxies have struggled to sustain the early impetus as they continue to track a herky-jerky bond market.
After rising nearly a full point at its best, the price of 30-year Treasury bond lately was up 2/32 to 92 13/32, its yield sliding back to 5.79%. (For more on the fixed-income market, see today's early
"Basically, the employment data came more or less in line with expectations, but because of rumors going around yesterday, everyone thought we'd get bad news," said Ken Ducey, director of trading at
. "We didn't have bad news, which became good news, but it's really a washout. That's why there's been more or less a flat reaction."
Tech stocks led the early rally in stocks, then stumbled most noticeably, but have recently recovered again. The
Nasdaq Composite Index
lately was up 30 to 2502 after rising as high as 2505.59 and then falling as low as 2462.27.
Among Nasdaq tech bellwethers,
were leading gainers. The
was up 1.8%.
New York Stock Exchange
was up 1.9% thanks to some positive comments from
SoundView Technology Group
Big Blue was the most positive influence on the
Dow Jones Industrial Average
, lately up 32 to 10,979 but down from its early best of 11,003.24.
TheStreet.com Internet Sector
index was up 6 to 618 after trading as high as 629.92 early on.
In Netland, bellwethers such as
were mixed after repeating a recent (and disturbing) pattern of struggling to maintain early strength.
Online brokers were a bastion of strength after
made some positive comments on the group.
was recently up 5.3% to 110 3/8 but down from its morning high of 113 7/16.
was up 6.2% to 115 vs. its initial best of 118 1/4.
was up 8 to 1340, slightly off an early rise to as high as 1342.76. The
was up 1 to under 435 vs. an early climb as high as 435.93.
The Russell 2000 was being hampered by a tumult in gold stocks, which plummeted along with the price of the metal after the
Bank of England
announced plans to sell up to 125 tons, or 60% of its reserves, by next March. Gold was lately down $7.30 an ounce to $283.40 while the
Philadelphia Stock Exchange Gold & Silver Index
was off 11.5%.
Overall, Ducey expects the recent (as in, last 90 minutes') positive tone will continue and perhaps gain force as the day proceeds. There has been a pattern in recent days: When the bond futures close at 3 p.m. EDT, stocks ramp higher.
"I would think" that will occur again today, "although as soon as you get to a pattern everyone is looking for, it changes," the trader said. "But if we have a decent market and people are expecting a better week next week, which I do, we could have a good strong close to get
the Dow above 11,000. Most things on my screen look green. I say, go with the flow."
New York Stock Exchange
trading, declining stocks were leading advancers 1,418 to 1,403 on 477 million shares. In
Nasdaq Stock Market
activity, winners were leading 1,856 to 1,761 on 511 million shares. New 52-week highs were topping new lows 61 to 17 on the Big Board and 47 to 21 on the Nasdaq.
Trouble, but Not Major League Trouble
Many traders were caught off guard by the inability of the employment report to inspire equities and fixed-income.
"I'm really surprised myself bonds are not acting better," said Bruce Bittles, market strategist at
. "My feeling is perhaps the dollar's been trending down the last few weeks, particularly vs. the yen. If the dollar is going to get soft here, that could negatively affect the bonds, particularly the long end."
The dollar recently was up 0.18 to 120.70 yen, however.
Morever, concurrent with the not-as-robust-as-feared April job figures, Bittles noted the March jobs data was revised downward, contributing to his "gut feeling" the U.S. economy is going to slow in the coming months.
Because of that expectation, for which he concedes there is little evidence other than yesterday's retail sales figures, the strategist expects "earnings are not going to come through like people think."
That, in turn, sets the stock market up for a period of "trouble," but not "major-league trouble" between now and June, he said.
The strategist foresees the Dow heading as low as 10,300 by the end of the year, with the Nasdaq "vulnerable" to another 10% decline.
"The problem is everyone owns the techs still, and it's a process of getting out," he said. "I think they'll bottom out in June and rally in July."
Friday's Midday Movers
IBM was picking up 4 to 213 1/4 after SoundView Technology Group analyst Gary Helmig said the outlook for Big Blue's second-quarter results is very strong and that he may raise earnings estimates. The 21-analyst
consensus calls for quarter earnings of $1.75 a share vs. the year-ago $1.50.
In new issues,
(MMXI:Nasdaq) was storming up 22, or 129.4%, to 39 1/16 after
Donaldson Lufkin & Jenrette
priced its 3 million-share IPO top-range at $17 a share. The company measures Internet audiences. Elsewhere, Web advertising and direct marketing company
(ADFC:Nasdaq) was up 19 5/8, or 130.8%, to 34 5/8 after
Hambrecht & Quist
priced its 4.5 million-share IPO above-range at $15 a share, and
(LATD:Nasdaq) was climbing 3 15/16, or 32.8%, to 15 15/16 after
Credit Suisse First Boston
priced its 3 million-share IPO top-range at $12 a share. Latitude is a provider of integrated voice and data conferencing solutions.
Newport News Shipbuilding
was up 5 1/4, or 19.4%, to 32 1/4 and its merger partner
was up 3 3/4, or 11.8%, to 35 9/16 after
made an unsolicited bid for both companies in a combined deal valued at more than $2 billion. Even after
Morgan Stanley Dean Witter
upgraded it to outperform from neutral, Litton was down 3 to 61 3/4. Avondale said Litton is offering $38 a share for the company; Newport News said it's being offered 0.55 of a Litton share for each Newport share. Last month,
tried to acquire Newport News but the
rejected the proposal.
In other news:
was up 3 3/16, or 20.3%, to 18 7/8 after late yesterday saying its board approved a plan to sell most of the company's investments and distribute the proceeds to shareholders.
CellNet Data Systems
was up 1 1/16, or 12%, to 9 15/16 after naming John LaMacchia, former chief executive of
E*Trade was up 5 9/16, or 5.3%, to 110 3/8 and Ameritrade was up 5 1/2, or 5.1% to 113 15/16 after Lehman Brothers started coverage of both stocks with buy ratings.
was off 5 1/4 to 164 1/4 after filing with the
Securities and Exchange Commission
to sell 3 million shares and $100 million in convertible securities.
was up 16, or 21.1%, to 92 1/8 after last night reporting fourth-quarter earnings of 45 cents a share, a nickel ahead of estimates.
was up 3 11/16, or 11.2%, to 36 11/16 after late yesterday posting second-quarter earnings of 36 cents a share, in line with the 24-analyst forecast and higher than the year-ago 29 cents. Today,
Warburg Dillon Read
raised the stock to buy from hold with a 12-month price target of 40.