Friday 5/5 Market commentary

[Sniper]

Futures are up this morning due to weaker than expected job data... nonfarm payrolls rose 138K, less than the expected consensus 200K. Looks to be a strong open for the market...

The WSJ also reported that Berkshire Hathaway's Warren Buffett is looking to make another acquisition.

[MrBlue]

The dollar also dropped hard against EUR on speculation that the weak jobs data will cause the Fed to pause raising interest rates. EUR is at 1.275 as I write.

[Sniper]

More info on BRK speculation...

Speculation that Warren Buffett will announce a major acquisition at Berkshire's annual meeting this weekend is also acting as an early source of support which could keep energy, utility, and insurance companies in focus since those are seen as ripe acquisition candidates.

[Sniper]

Rumors now circulating that Buffett's target may be... Sara Lee (SLE)

[mcb]

iscar metalworking

[notluck]

SLE has negative TNW, wouldn't that almost discount that rumor?

-Alex

[Sniper]

Briefing's closing comments on today's market action...

Stocks closed at their best levels of the day as equity investors rallied around the possibility that a jobs shortfall may prompt the Fed to end nearly two years of rate hikes sooner than anticipated. Blue chips led the charge as the Dow Industrials surged 1.2% to within 145 points from an all-time closing high of 11,722.98 reached on January 14, 2000; 29 of 30 components closed higher. All ten economic sectors closed in positive territory as the day's broad-based rally also helped lift the S&P 400 MidCap Index and Russell 2000 Small Cap Index to historic highs.

According to the Labor Dept, non-farm payrolls rose a less than expected 138,000 in April, reflecting the smallest gain since October and implying that the robust jobs growth seen in Q1 is not carrying over into Q2. The unemployment rate holding steady at 4.7%, meeting economists' forecasts, also offered some relief about Fed policy. Even though the larger than expected 0.5% rise in hourly earnings -- the fastest annual gain since August 2001 -- pushed the year/year gain to 3.8% and may put some pressures on businesses to raise prices, the market took a bullish cue from bond traders on the inflation front. The yield on the 10-yr note (+10/32) finished at 5.10%, or about 7 basis points lower than the four-year high of 5.17% reached yesterday.

Reports that Warren Buffett may announce a major acquisition at Berkshire Hathaway's annual meeting over the weekend also acted as a source of support. To wit, Utilities not only turned positive for the year, surging 2.1% to earn the day's best performance as falling bond yields made the dividend payouts of utilities more attractive, but the sector garnered extra attention since Buffett has done little to hide his partiality for companies like utilities. Such speculation was evidenced by a 3.4% surge in PG & E (PCG 40.80 +1.34), a possible acquisition target cited by The Wall Street Journal.

Another rate-sensitive sector taking advantage of the decline in borrowing costs was Financial, led by a 3.2% surge in Brokerage, while Industrials also posted a gain of more than 1.0% fueled by an intraday all-time high on Caterpillar (CAT 79.98 +1.17) and another historic high on the Dow Transports. Also closing sharply higher was Consumer Discretionary, amid strength in Homebuilding, Computer & Electronic Retail, Home Improvement Retailers, and General Merchandise -- four of the day's top ten performing S&P industry groups.

Even Energy, despite crude oil's inability to recover from its biggest two-day slide (-6.3%) since December 2004, impressively extended its leading year-to-date gain to nearly 17%. El Paso (EP 15.18 +1.69) soaring 12.5% to a new 52-week high after more than tripling Q1 profits and EOG Resources (EOG 76.31 +4.86) surging 6.8% after more than doubling its Q1 net income were noteworthy sources of sector support. BTK +3.2% DJ30 +138.88 DJTA +1.0% DJUA +2.2% DOT +0.2% NASDAQ +18.67 NQ100 +0.8% R2K +0.9% SOX +0.4% SP400 +1.0% SP500 +13.51 XOI +1.0% NASDAQ Dec/Adv/Vol 1099/1924/1.97 bln NYSE Dec/Adv/Vol 850/2415/1.69 bln

[shark6]

Bad news is good news because the Fed will either stop raising rates or start lowering.

And, good news is good news because consumers will continue to spend more money than they earn.

How can the market ever go down if this is how the Street reacts to everything?//