Stocks traded lower all day thanks to a dismal unemployment report. The non-farm payroll number was not as bad as some people were expecting. 524,000 jobs were lost in December while some people were calling for 700,000+. However, downward revisions for the October and November reports subtracted another 154,000 jobs. The unemployment rate rose to 7.2% from November’s 6.7%. The average estimate was for 7.0% unemployment in December.
The growth stocks that led the market higher the last few weeks as people were optimistic about a recovery – materials, energy, commodities – were the laggards today as the unemployment data suggested it might be longer than people think before a recovery occurs.
Oil stocks were weak thanks to oil dipping below $40 per barrel. Just one week ago oil was trading at $50. On top of falling oil prices, Halliburton and Schlumberger, two of the biggest oil services companies, announced they will be cutting jobs. SLB will cut 1,000 North American jobs - more than 5% of its domestic work force. HAL did not disclose how jobs will be cut.
Continuing with the job loss theme, Boeing announced it will cut about 4,500 jobs which is about 3% of its global work force. Boeing also reported a 15% decline in passenger jet deliveries for 2008.
On the earnings front, some notable companies disappointed:
1) Coach lowered its profit expectations. It now sees Q2 profit of $0.67 per share. Its previous estimate was $0.77 per share. Comparable store sales for December declined 13%.
2) Best Buy narrowed it full-year profit expectations. The company now sees profit of $2.50-2.70 per share. The previous estimate was $2.30-2.90 per share. December same store sales declined 6.5%.
3) CVS was down 12.5% on the day after the company forecasted 2009 profit of $2.35-2.43 per share. This range is below analysts’ average estimate of $2.56 per share.
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