The bulls are trying to push past our resistance targets for the major indexes after getting a better-than-expected jobless claims report. Initial jobless claims came in at 445,000 versus the expected 455,000, while continuing claims were 4.46 million versus expectations of 4.45 million. This gave futures a lift which lead to a nice open but trading is slightly negative as all eyes are now focused tomorrow’s non-farm payrolls report. Wall Street is expecting the unemployment rate will rise to 9.7% last month from 9.6% in August.
The Dow made a run at 11,000 and traded as high as 10,998 but is currently down 52 points to 10,914. If the bulls are able to break 11,000 today then we would be a little nervous of a continued breakout because it could be a classic trap by the bears. If the index closes right below 11,000 and gets a good number tomorrow, then we would expect the index to easily run past 11,000 with a run possibly up to 11,300.
The S&P 500 is down by a 7 points and stands at 1,153 but has traded past 1,160 to a high of 1,164. We think a run to 1,175-1,200 could be in the cards but it will depend. And finally, the Nasdaq is down 9 points to 2,371 and has traded as high as 2,392. We are watching the 2,400 level like a hawk.
There is a feeling that the release of Friday’s monthly employment report will sway the market one way or the other but we think 3Q earnings will likely set the stage for where the market is headed over the short-term. We also have an uneasy feeling with the world currency deflating race that is currently going on and the parabolic moves gold, copper and silver are making is mind-blowing but we believe there could be some surprises, good and bad, that will dramatically impact the market over the next 3 weeks.
Speaking of earnings, PepsiCo (PEP, $65.58, down $2.53) reported a profit of $1.9 billion, or $1.19 a share, versus $1.7 billion, or $1.09 a share, in the year earlier period. Revenue jumped 40% to $15.5 billion versus expectations for $15.4 billion. Excluding items, the company said earnings were $1.22 a share versus expectations of $1.21 a share. The stock took a hit after the company said growth going forward would be between 11%-12%, down from 11%-13% growth.
Alcoa (AA, $12.23, down $0.14) and Micron Technology (MU, $7.09, up $0.14) will release their quarterly earnings after the bell.
We will be back in the morning with September’s nonfarm payrolls report and unemployment rate, as will the Commerce Department’s report on August wholesale inventories. Subscribers, check the Members Area for the updates on our current trades and comments for our Watch List.