Before the bell: Futures surge as unemployment falls, job losses decline

Posted Dec 4th 2009 7:45AM by Melly Alazraki
Filed under: Before the Bell, International Markets, Market Matters, Bank of America (BAC), Economic Data, Commodities, Oil, Federal Reserve

U.S. stock futures inched higher Friday morning, but traded in a narrow range as Wall Street awaited November's government employment report, hoping it will show a declining rate of job losses.

Update: The U.S. labor market improved markedly in November, the Labor Department reported Friday. The unemployment rate fell back to 10%. Nonfarm payrolls dropped by a seasonally adjusted 11,000 in November, the fewest since December 2007. U.S. stock futures surged after the report, indicating Wall Street would open significantly higher.

On Thursday, stocks ended a choppy session with declines. While the day started on a positive note following Bank of America's (BAC) announcement it would repay $45 billion of bailout funds, stocks eventually fell ahead of Friday's payroll report and comments from St. Louis Federal Reserve President that the Fed could raise rates even without a recovery in the jobs sector.

At 8:30 a.m. Eastern, an hour before the opening bell, the Labor Department will release data on November nonfarm payroll. While the economy is getting closer to generating jobs for the first time in two years it's not there yet, and for now investors will have to be content with fewer jobs cut.

Analysts expect that in November employers cut 130,000 jobs, according to Thomson Reuters, although this number stands at 125,000 according to Briefing.com. That would be an improvement over the 190,000 jobs shed in October. The unemployment rate is expected to remain at 10.2%, a 26-year high. While unemployment may continue to rise, the market could react quite positively to any job losses below 100,000, according to analysts.

Meanwhile, President Obama will continue his push toward more job-creation measures, including a possible House bill, albeit the moves are limited by out-of-control budget deficits.

Other than the jobs report and the accompanying data, at 10:00 a.m., October factory orders are due.

Overseas, world stocks mostly fell Friday ahead of the U.S. jobs report that investors watch closely for signs of recovery. Oil prices slipped to near $76 a barrel Friday, and gold futures fell too.

And true to its plans to repay TARP funds, Bank of America Corp. raised $19.3 billion selling securities at $15 apiece in the biggest sale of stock or preferred shares by a U.S. public company since at least 2000.

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