Wall Street Takes 14-Year High Unemployment Rate With A Grain Of Salt

The market finishes the week higher after the worst two-day decline since the 1987 stock market crash. The Dow Jones Industrial Average (^DJI) increased 248 points, or 2.85% for the day, and 3.4% for the week. Similarly, the S&P (^GSPC) rose 2.86%, and the Nasdaq (^IXIC) moved 2.41% in the green. Investors must have felt the after-election fall wasn’t completely justified, as signaled by today’s increase. Either that, or the 14-year high unemployment rate was taken with more than a grain of salt by Wall Street. The White House continued to preach patience, and stated that the $700 billion bailout plan will take some time to make a noticeable impact.

Jobless Claims this month reached the levels seen in March 1994 of 6.5%. A total of 1.2 million jobs have evaporated this year, though the market hit another dead-end in October with the Dow dropping over 14% on the month, conditions might still worsen as companies continue to release earnings and announce job cuts like Ford has done today. Ford (F) announced earlier today that they will cut roughly 2,200 jobs or 10% of salaried workers in North America. This news comes after Ford missed earnings by $0.37, and lost $1.31 per share this past quarter.

European markets proceeded higher Friday despite Germany experiencing the largest drop in industrial production in 13 years this past September, which fell 3.6%. The DAX (^GDAXI) moved up 2.49%, while the FTSE (^FTSE) climbed 2.59%, and the CAC 40 (^FCHI), 2.42%. The dollar is trading around the opening price of 0.7838 euros.

The Nikkei continued to drop 3.55% during the market hours on the day after Toyota Motors (TM) lowered their forecast of future profits. Following up on the potential merger of Panasonic (PC), and Sanyo that I mentioned earlier on in the week, both boards of directors met today and announced that they will be seeking a deal with their shareholders to continue the merger process. The Hang Seng made gains of 3.29% on the day, while Taiwan’s Straits Times climbed 2.43%.

Oil proceeded marginally higher on Friday after getting slaughtered yesterday. Crude jumped 0.23% today, trading slightly below $61 at $60.91. Oil traders must not believe recent highs in the unemployment rate are too alarming, nor believe that it will mean a tremendous drop in demand. Traders are considering the global drop in production and factory orders in the past few months, which directly relates to a drop in factories’ demands for oil. Gold only gained $1.50 on the day, and is trading around $732.70.

Microsoft (MSFT) has formally announced that they will not make a renewed bid for Yahoo (YHOO) after Yahoo dodging bids for several months. CNBC.com’s analyst Jim Goldman believes that, although Microsoft has no interest for a 100% claim in Yahoo, he believes that Microsoft is still extremely interested in purchasing its search engine service. Keep alert for such a confirmation or denial.

Disclosure: The fund the author is associated with holds a long position in MSFT.

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