Tech gains help stocks rebound

Dow gains 20 after being down much of the day. The dollar slips. US employers added fewer workers than expected in November. Unemployment rises to 9.8%. Gold jumps as investors take cover.

By TheStreet Staff Dec 3, 2010 9:01AM

TheStreetWall Street © Comstock Images/agefotostockBy Melinda Peer, TheStreet

 

Updated at 4:53 p.m. ET

 

Stocks rebounded in the final hour of trading as gains in tech shares helped the market recover from a disappointing jobs report.

 

The Dow Jones Industrial Average ($INDU) rose 20 points, or 0.2%, to close at 11,382. The S&P 500 ($INX) edged higher by 3 points, or 0.3%, to 1,225, and the Nasdaq ($COMPX) added 12 points, or 0.5%, to finish at 2,591.

Stocks have gained for three straight days, lending a strong start to December. The Dow rose 2.6% over the week while the S&P 500 gained 3%.

The somewhat muted reaction of the markets to the adverse jobs reports on Friday took analysts by surprise.

 

American employers increased their payrolls by 39,000 in November, fewer than the 130,000 economists had projected and the 172,000 added in October, according to Briefing.com. The unemployment rate climbed to 9.8% -- the highest level since April -- from 9.6% in October.

 

Payrolls at companies rose by 50,000, compared with the 140,000 increase economists had estimated. In October, companies added 160,000 jobs.

 

A recent wave of positive economic news and better-than-expected ISM services and factory orders report may have been one reason why investors may have shrugged off the jobs report, according to market experts.

 

The weaker dollar, which has had a greater influence on stocks in recent months, may have been another reason for the surprise rally on Friday.

 

Speculation that the Fed might step up its quantitative easing program also aided sentiment. The stubbornly high unemployment rate was one of the main factors cited by the Federal Reserve in its decision to begin purchasing $600 billion of long-term Treasurys through the second quarter of 2011. The Fed has said it will regularly review the pace of its asset-purchase program against economic conditions to ensure that it achieves the central bank's desired goals.

 

"Bad news is good because that means the Fed will keep on spending," said Ron Courser, the president of Ron Courser & Associates. "All (Fed Chairman Ben) Bernanke is trying to do with (quantitative easing) is reflate the assets so that the market starts to feel better and people start to go out and buy more stuff, increasing demand and spurring employment."

 

The February gold contract gained $16.90, or 1.2%, to settle at $1,406.20, boosting gold stocks. Newmont Mining (NEM) ended up 3.1% at $62.36, while AngloGold Ashanti (AU), Barrick Gold (ABX) and Vista Gold (VGZ) were all up by more than 2%.

 

The weak U.S. dollar also helped commodity prices. The greenback traded lower against a basket of currencies, with the dollar index down by 1.4%. The January crude oil contract was up by $1.19, or 1.4%, to settle at $89.19 a barrel.

 

The basic-materials sector saw the session’s strongest gains as a weaker U.S. dollar increased the appeal of dollar-priced assets.

 

DuPont (DD), Alcoa (AA) and Bank of America (BAC) topped the Dow while Cisco (CSCO) and Exxon-Mobil (XOM) were its biggest laggards.

 

Sunoco (SUN) shares dropped 3.9% to $39.58 after it agreed to sell its Toledo, Ohio-based refinery to Toledo Refining Co. for $400 million. The transaction is expected to be completed in the first quarter.

 

Shares of Apollo Group (APOL) were up 2.9% to $36.38 on speculation that Secretary of Education Arne Duncan could soon meet with members to discuss recently proposed regulations on the for-profit education sector.

 

Shares of Big Lots (BIG) closed down 5.1% to $29.50 after the retailer reported a third-quarter profit that missed expectations by 1 cent and cut its full-year earnings forecast.

 

Chevron (CVX) is selling an 18% stake in an Indonesian deep-water gas field to Sinopec (SNP) for $680 million. Shares of Chevron gained 0.5% to $84.89, while Sinopec's stock fell by 1.6% at $94.46.

 

Walter Energy (WLT) has agreed to buy Canada's Western Coal for $3.3 billion. Walter Energy's stock rallied 4.7% to $110.52.

 

The Institute for Supply Management said its services index, a measure of nonmanufacturing activity, rose to 55 in November from October's reading of 54.3. The level outpaced the reading of 54.5 that economists had been anticipating, according to Briefing.com.

 

The Department of Commerce said factory orders slipped 0.9% in October after rising 2.1% in the previous month. Wall Street had projected a decline of 1.3%.

 

The House of Representatives approved a measure on Thursday to maintain the current tax rates for people making up to $250,000 but would allow higher taxes on people with larger incomes. The Senate is expected to reject the measure.   

 

The FTSE in London lost 0.4%, and the DAX in Frankfurt fell 0.1%. Hong Kong's Hang Seng lost 0.5%, while Japan's Nikkei gained 0.1%.

 

The benchmark 10-year Treasury note weakened 3/32, lifting the yield to 3.007%.

 

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249Comments
Dec 3, 2010 5:27PM
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Living and Learning, why not pass that tax unto those that PAY nothing?  Why should these freeloaders skate?

 

Sorry, but everyone should pay the same taxes, unless you believe in inequality and basic fairness...

 

You left wing, socialist so remind me of the Nazis, oh wait they were socialists too...   Take from those that have, because we think some other people need their wealth...

 

This is the reason the DONKEY party needs to be fired....We just fired 2,000 of them nationwide, we obviously still need to fire more!

Dec 3, 2010 11:26AM
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 Wait a minute. Yesterday the market gained 249 points on news 93,000 jobs were added in November and now today the news is only 39,000 were added with the unemployed still increasing in numbers. An intentional transposition typo error that benefited the market for the day traders? Who is coming up with all this crazy ****?
Dec 3, 2010 3:19PM
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Notice how the employment rae sent stocks tumbling??  NOT!!!  I think it is just a "breather" day after a 40+ point two day upswing for the S&P.  The rest of the reasoning is nothing but over thinking and just clutters the mind.
Dec 3, 2010 6:00PM
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Taxpayer 1
 A handout is getting more back than you put in.
Isn't this also the definition of making a profit?
Dec 3, 2010 5:47PM
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Well get ready for $4.00 a gallon gas again.  Hopefully this will make the consumer put on the brakes before spending too much for Christmas. The oil price increase has to do with both Bernanke's idiot policy and Obama's announcement today to restrict drilling in the eastern Gulf of Mexico. 

 

Too bad we will never see an overhaul of the tax code and a fair tax in place of the current disaster we have.  I think an across the board 12% ( including welfare recipients) rate would force the 47% not paying to pay their share, give the middle class a break and encourage small businesses and larger companies to begin hiring.  Look for a 10% unemployment rate by next year if we can't get GDP growing above 2%.

Dec 3, 2010 4:35PM
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dunnunder - my portfolio had a great day so I'm very happy.  It's not just the fat cats on Wall Str that benefit from a good market.
Dec 3, 2010 2:37PM
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I read a commentary by Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, today in which he basically recommended­ reinstati­ng Glass-Stea­gall and breaking up the 'big 5' banks.

According to Hoenig, even after the bailouts and the financial reforms passed by Congress, the five largest financial institution­ns are now 20% larger than they were before the crisis, and they control $8.6 trillion in financial assets, the equivalent of 60% of GDP.

These banks spend tens of millions of dollars lobbying (both parties), so any chances of real reform are about nill. Breaking up these banks into much smaller entities is the only way we will avoid another meltdown and another round of bailouts in the future.
Dec 3, 2010 2:27PM
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From Delky:

 

Bet you didn't see that comin, did ya delky....

no sir, 2 sick, i didnt!!! hhaha

 

but now i dont feel so bad for him

 

So this is what I see from most Liberals. They pretend to care for you as long as you are supporting thier agenda. LOL

Dec 3, 2010 2:09PM
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Tumbleweed:  The Euro can't withstand as many different fiscal policies under it that are.  A global currency would be disasterous.  A few very irresponisible countries could easily destabilize the entire currency.
Dec 3, 2010 1:42PM
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Deklen, I doubt I'm the only one on here that has figured you out to be a liberal poser using multiple avatars claiming to be independent. I think it's funny. It would not be as entertaining without you on here, probably a lot more informative but definitely not as entertaining. You fit the liberal stereotype so well, unable to put together any meaningful thought and always lacking support, just throwing out the same tired crap under different names.
Dec 3, 2010 1:38PM
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MirageGuy, You are right that the debasing of the dollar may play a part in the increase in the market but the 250 point jump on Tuesday was driven by the report of 93,000 new jobs in Nov. And a 107 point jump the next day based on pending home loans of which most won't actually be approved. And gold and silver prices have actually stayed fairly level over the past few months. So I call it smoke and mirrors. Pump up the market on any sniff of good news and try to ignore the bad news. The markets value is way over inflated and it will come crashing down in the near future.

 

Dec 3, 2010 1:34PM
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I don't think you have any idea what the left fringe actually is. Pelosi and Reid certainly aren't examples of it.
Xplo:

I'm not saying that there aren't people to the left of Pelosi, but Pelosi is certainly far from a moderate voice.  There is always someone more extreme.

Being in a political office generally tends to reign a person on a little bit, but not with Pelosi she is out there.  She is definitely the worst Speaker of the House in my lifetime by far.    
Dec 3, 2010 1:27PM
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Mark Johnson...  The Stock Market is going up because of the debasement of the dollar.   AU/Ag are confirming this.   Stocks are a natural liquid hedge against government printing presses.  Study your history of the Weimar Republic and recent African nations...   
Mirage:

Your post is very true.  It also explains why the market isn't making any real headway, just up a few hundred one week and down the next.  Investors are trying to make profits in the market and then pulling the profits out of the market and buying gold to protect against currency debasement.

Pump the stock market, then dump take your profit  and buy gold.   
Dec 3, 2010 1:27PM
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Volker, I am all for cutting Defense spending.  We cannot afford to be policeman to the world without getting paid to do the job.   I would suggest a 15% haircut to start...

 

We need to balance the budget ENTIRELY on SPENDING cuts.   Sorry, but I firmly believ raising taxes is like slamming the brakes on economy activity.

 

Take money out of peoples pockets and they WILL SPEND less...  

 

We can agree to disagree...

Dec 3, 2010 1:25PM
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DEKLEN, you sure are uneducated, prejudiced, and have never known any Republicans.  I am black and a Republican because they are simply the better, more fair, party.  Has nothing to do with race.  Remind me again, how much have the Democrats done for blacks?  Besides forming the kkk?  Martin Luther King was a registered Republican.  I guess he didn't get the memo about your imaginary right-wing racism.   Plenty of it on the left though! 

Dec 3, 2010 1:15PM
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Why is the left so bent on taking from those that have to give to those that need?

 

Why is the Donkey party so bent on slamming on the economic brakes with still more Taxes, Spending, Borrowing and debasing the Dollar?

 

We have basically tried it the Donkey's way for 4 years now.  Are you better off now than you were 4 years ago?  

 

The recovery begins Nov. 2012 when we fire another 2,000 Donkeys...  

 

 

Dec 3, 2010 1:02PM
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delken, I'm not sure how I had a hand in my own situation. Please enlighten me. And by fringe moderates do you mean TEA-PARTY? Why is it so hard to understand that these people are more intelligent than 99% of the Liberals in this country. The Liberal philosophy of entitlement spending doesn't work. Just look at most countries in Europe that are now in major melt down. But then this isn't really about helping people!!! It is the DEMOCRATIC PARTY belief that if they vote in enough handouts they will secure a wide voter base that is obligated to keep them in office. Tea-party members are smart enough to understand that this is dragging our nation into bankruptcy.
Dec 3, 2010 12:24PM
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things are getting better, no thanx to the bush voting hackarama that screwed us
deklen:

You keep repeating this mantra - things are getting better.   "Things", what "things?"   Of course, you will respond with the completely unverifiable statement "well they are for me."  How can anyone refute this?

News flash - "things are not getting any better."   Unemployment is not improving.  We are not manufacturing more products.  Our dollar is not getting stronger, it is devaluing.  Our trade deficit is not getting smaller, but larger.  Oil prices are not going down, they are going up.   Foreclosures are going up, not down.

Things are not getting better and your constant repeating of the line "things are getting better" won't change this fact.

Dec 3, 2010 11:34AM
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you cannot be serious.  I suppose you also think Sarah Palin would make a great president.

Compared to a community organizer???????Thinking

Hell YEA!!!!!!!

Dec 3, 2010 11:32AM
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L&L, it depends on why and how the deficits were created, how large, and what we are going to do to eliminate them. Deficits will be paid out of everyone's pockets including our children and their future children. I don't like deficits but I dislike taxes even more. The government is TOO DAMN BIG. Cut spending, cut federal employees, cut federal employees union like wages and benefits. 1 out of 5 workers is a government worker. There's plenty to cut but nobody will do it.
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