[Update: 8:38 a.m.: The Labor Department reported that U.S. nonfarm payrolls fell by an estimated 4,000 in August, as U.S. firms cut back their hiring in August for the first time since August 2003. The unemployment rate held steady at 4.6%. The decline is much weaker that expected and pundits think the Fed will now have to cut rates. We may now see a change in direction of stock futures, although this is a puzzling turn of events and may take time to fully digest.]
[update 8:54 a.m.: Concerns over the economy going forward seem to outweigh the possibility of a rate cut and futures have further declined, indicating a much lower start on Wall Street.]
Yesterday markets rallied following strong August retail sales data. Two other reports were released, worker productivity showed biggest gains in nearly two years and growth in the service sector was also better-than-expected. The market see-sawed a little since some thought these would not compel the Fed to cut rates. Meanwhile, foreclosures set another record. What may be most revealing ahead of today's employment report was yesterday's jobless claims report, the number of newly laid off workers filing claims for unemployment benefits, which fell to a five-weeks low.
Today, the employment report for the month August will be front and center of the Street's focus. The report will be released at 8:30 a.m., before the market opens, ,and economists are expecting nonfarm payroll to increase by 110,000 compared to a 92,000 rise in July. Unemployment rate is expected to remain steady at 4.6%. Similarly, hourly earnings should rise 0.3%, same as last month. All data is from Briefing.com. Bloomberg has slightly different data and reminds us that Bernanke said the Fed would pay special attention to the timeliest indicators.
Then, at 10:00 a.m., July wholesale inventories are due and expected to grow 0.5%, same as in June.
Not helping sentiment much this morning are comments from former Federal Reserave Chairman, Alan Greenspan. Greenspan compared the current turmoil to that of 1987 and in 1998, when the giant hedge fund Long-Term Capital Management nearly collapsed. Last time when Greenspan said the economy is likely to go into a recession in February, markets sold off sharply.
Overseas, Asian stocks ended mixed with Chinese stocks falling 2.2% after the People's Bank of China announced yesterday it was raising the reserve requirement ratio. European shares are down, but in a narrow range, awaiting news from the U.S.
In corporate news:
Steve Jobs, Apple Inc. (NASDAQ: AAPL) CEO wrote an open letter to iPhone customers offering $100 credit. Many first adopters weren't happy to have paid $200 more on the iPhone than the current new price announced September 5 of $399. Will $100 be enough to satisfy them?
Meanwhile, continued indication of the slump in the housing market was seen in Hovanian Enterprises (NYSE: HOV) financial results yesterday. Yet, despite Hovanian reporting a wider loss than expected, HOV shares are up 5.5% in premarket trading (as of 7:02 a.m.) as the market approved of Hovanian strategy to cut prices.
On the flip side, Harley Davidson (NYSE: HOG) shares are down 9.06% in premarket trading (7:14 a.m.) after it issued a profit warning and cut its expectation for motorcycle shipment.
More coporate news: Before the bell: WYE, LEH, KKD, DELL, F, PEP