Improvement From ADP Employment Report Turns Futures Positive, Offsetting Banking Con

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Wednesday, 06 May 2009 12:52:53 GMT
Written by John Rivera, Analyst

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The ADP private employment report showed that the economy lost 491,000 jobs in April which was far less than the initial estimates of -645K.

What To Watch For In The US Session

• ADP Shows Labor Market Improving
• Bank of America Reported To Need $34 Billion
• Challenger Job Cuts and MBA Mortgage Applications Add To Improving Picture

Improvement From ADP Employment Report Turns Futures Positive


The ADP private employment report showed that the economy lost 491,000 jobs in April which was far less than the initial estimates of -645K. The report has raised expectations that we may see a similar improvement in Friday’s Non-farm payroll report which has turned futures positive. A report that Bank of America may need to raise $34 billion had weighed on optimism before the labor report and had dragged futures lower. We may still see the pending bank stress tests results limit bullish sentiment as traders fear the unknown. Nevertheless, a 2.0% improvement in MBA mortgage applications and the Challenger job cuts gauge falling from 180.7% to 47.0% add to the improving picture for the U.S. economy.

Dow Jones 8410.65

The DJIA futures have turned decidedly positive following the ADP release and unless we see the concerns over the banking sector the blue chip index may continue its upward trend.

NASDAQ 1754.12
The Nasdaq could receive a significant boost from the labor data and its potential impact on consumer spending. However, dour earnings from Garmin which missed estimates of $0.42 per shares with earnings of $0.25 could send its shares lower and temper expectations for domestic growth.

S&P 500 903.80
The S&P 500 may also find support from the improved labor market but if banking concerns reemerge then the broader index could end the day lower as we get closer to the results of the bank stress tests.

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