Tag - Nsm

Small-cap stocks are expected to open slightly lower, with support from gains in Europe and Asia countered by a weak tone on tech stocks. Luxury goods makers were up in Europe and ocean shippers were riding the wave higher in Asia, but tech stocks were a worry overnight after warnings for U.S. firms and news of massive job cuts for Japan’s Sony. Stock index futures were down 0.1% in pre-market trading, suggesting a Russell 2000 (NYSE:IWM) open near 480.50.

Chip makers Texas Instruments Inc. (NYSE:TXN) and National Semiconductor Corp. (NYSE:NSM) both slashed revenue forecasts overnight, and were down some 5% in pre-market trading, which could drain enthusiasm out of the tech arena, especially in light of the Sony news.

Commodities were a driving force during Monday’s big rally, fueled by the infrastructure plans forwarded by President-elect Obama over the weekend. However, commodities were relatively tame in Europe and Asia overnight. Crude oil prices moved on either side of steady heading toward the U.S. stock market open, but copper prices tumbled 6% in London, which is a troubling sign since copper is considered a key barometer of economic activity.

Investors will look to see if the rescue package for automakers can be finalized today. The general perception is that an initial loan of some $15 billion is in the works, which should be enough to avert a “worst-case” scenario in which General Motors Corp. (NYSE:GM) or Ford Motor Co. (NYSE:F) declare bankruptcy and trigger a downward spiral of collapse among connected businesses.

The chart picture for small caps improved dramatically in recent days and . . .

Small-cap stocks opened lower, pulled down by a surprising jump in the unemployment rate, which climbed to 5.5%, the highest rate in 3 ½ years. At 9:53 a.m. ET, the Russell 2000 (NYSE:IWM) was down 7.37, or 0.97%, at 755.90.

The headline non-farm payroll figure came in at minus 49,000, which was better than the forecast for a slide of 58,000, but the payroll figure was upstaged by the stunning jobless rate number. Economists had forecast a rise in the unemployment rate to 5.1% from 5%, and a jump of 0.5% is extraordinarily rare. In fact, this marked the biggest monthly jump in the unemployment rate in 22 years.

“The unemployment rate soared in May because of huge surge in the labor force, perhaps because of seasonal adjustment difficulties associated with the ending of the school year,” Steven Wood, chief economist with Insight Economics, said in an email report. “However, this big increase may also have been a catch-up from its slow rise in the past few months. In any event, the number of unemployed has increased by 1.6 million to 8.5 million and the unemployment rate has increased by 1 percentage point to 5.5%. In the post World War II period, every time the unemployment rate has jumped by a full percentage point in the course of a year, the economy has slipped into recession.”

Even the headline figure, which might have been embraced by equity bulls if not for the unemployment rate surge, wasn’t exactly a sign of great things. According to Wood, “The bottom line is that jobs declined in May and the economy has clearly slipped into a mild jobs recession because the housing meltdown and credit market turmoil has spread to the broader economy. Persistent job losses will eventually pull the overall economy into recession.”

This was the kind of head-scratching, out-of-leftfield numbers surprise that can hatch an entire cottage industry of data conspiracy theorists. For now, traders and analysts tilted toward the bullish side of things were explaining away the sudden jump . . .