Dow Jones Index Up 1%

Posted on | July 1, 2009 |

Wall Street opened in positive territory this afternoon, after closing down 82.38 points on Tuesday, as unemployment data released earlier today revealed relatively fewer job loss announcements in the US last month.

At 3.05pm (London time), shortly after the opening bell on Wall Street, the Dow was up by 87.75 points (1.04%) to 8534.75, while the S&P 500 was up 8.99 points (0.98%) to 928.31.

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Earlier today, a report released by Chicago-based placement agency Challenger, Gray & Christmas had revealed that job cut announcements by US employers totalled 74,393 in June, down 33% from May, and 9% lower than the 81,755 job cuts announced in the same month a year ago. June’s figure has been the lowest recorded total since March 2008 – possibly signalling that the worst may finally be over for the country’s troubled economy. ‘It appears that many employers have reached the staffing levels they need to make it through the recession. Still, it could be several more months before we see hiring make a comeback,’ John A. Challenger, chief executive officer of the placement company, said in a statement today. [1]

In another report, payroll-processing firm Automatic Data Processing has revealed that employers in the private sector cut 473,000 jobs in June, 2.5% less than the revised 485,000 drop recorded in May. June’s figure was, however, higher than the loss of 394,000 jobs predicted by economists surveyed by Briefing.com [2]

Not surprisingly, sentiment was upbeat in the US today, with Kraft Foods rising 3.31% to $26.18, Coca Cola up 1.92% to $48.91 and Caterpillar climbing 1.82% to $33.64. Technology giants Intel Corp and Microsoft were also up, rising 2.60% and 1.85% to $16.98 and $24.21 respectively.

Pfizer, on the flip side, was down 0.53% to $14.92, along with Johnson & Johnson, Merck & Co and Travelers Co, all of which were down between 0.12% and 0.33% to $56.61, $27.92 and $40.99 respectively.

At home, resources stocks maintained a comfortable lead on the FTSE 100, with Eurasian, International Power, Xstrata and Kazakhmys up between 5.48% and 6.49% at 697p, 251p, 694.9p and 664.5p respectively.

Vedanta Resources surged to the top of the FTSE leaderboard today, rising 10.56% to 1424p at 3.05pm, following news that the Indian miner has boosted the size of its share buy-back programme by 40% to $350 million. The group had, in December, spent $250 million to rebuy up to 10% of its shares, and is now increasing its programme by another $100 million. [3]

Looking ahead, the all-important non-farm payrolls will be released in the US tomorrow – a day earlier than usual on account of the Independence Day holiday on Friday. A median forecast of economists surveyed by Bloomberg estimates that payrolls fell by 363,000 in the US last month, following a decline of 345,000 the month before. According to analyst indications, tomorrow’s figure will mark the first back-to-back figure of fewer than 400,000 job losses recoded since September-October. [4]

[1] Bloomberg News (1 July 2009)
[2] CNN.com (1 July 2009)
[3] Reuters News (1 July 2009)
[4] Bloomberg News (1 July 2009)

By Anthony Grech, Research Analyst, IG Index.

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