Before the bell 1-5-07: Down before jobs report

Posted Jan 5th 2007 7:47AM by Melly Alazraki
Filed under: Before the Bell, Microsoft (MSFT), Ford Motor (F), General Motors (GM), Motorola (MOT), Toyota Motor Corp. (TM), Nokia Corp. (NOK), New York Times'A' (NYT)

Stock futures are down in early morning trade indicating to a similar start for stocks on a very busy news day.

Today, important economic data will be released before the opening bell, while on the corporate front there are a few developing stories.

At 8:30 a.m. this morning, the all important December jobs report will be released. Among the data included in the report is non-farm payroll which consensus economists expect to rise by 100,000 compared to an increase of 132,000 in November. Unemployment rate is expected to remain at 4.5% while hourly earnings are expected to rise by 0.3% compared to 0.2% the month before.

The problem with the jobs data is that many times it can be positive to one aspect of the economy, say higher employment would mean healthier economy than feared, and negative in another aspect such as higher hourly earnings would mean more inflationary pressures than feared. The market sometimes chooses to emphasize one data point over the other, depending on how positive or negative that data point is.

Oil prices, which dropped yesterday below $56 a barrel, continued their decline this morning. Meanwhile European stock markets are negative for the second day in a row despite confidence in the European economy remaining close to a six-year high and unemployment falling to a record low.

Asian stock markets closed mostly lower over concerns of a rate hike in Japan, causing the dollar to drop against the yen.

On the corporate fronts a few stories are developing:

Motorola Inc. (NYSE:MOT) warned yesterday evening and lowered fourth quarter estimates. Four firms downgraded Motorola and a fifth lowered its target price. MOT shares were down 8.76% in pre-market trading at 7:10.

Rival Nokia Corp. (NYSE:NOK) is down more than 4% in pre-market trading following Motorola's warning and was downgraded to Neutral by Credit Suisse.

General Motors Corp. (NYSE:GM) CEO said the company will cut more jobs in 2007 and vowed defend its ranking as the world's No. 1 automaker from rival Toyota Motors Corp. (NYSE:TM).

Eclipse Aviation, a company run by a former Microsoft Corp. (NASDAQ:MSFT) made its first microjet, or "very light jet" sale.

Meanwhile, Ford Motor Co. (NYSE:F) Chinese joint venture said that its sales of its Ford-brand automobiles in China more than doubled last year.

The New York Time Company (NYSE:NYT) plans to sell its broadcast media group for $575 million, and might use the proceeds on debt reduction or acquisitions.