Dow Jones Moves Slightly Higher Amid ADP Employment Figures

Posted on | December 2, 2009 |

The Dow opened uncertainly but positively today.

The latest employment data, while an improvement, seemed to underwhelm investors and signalled the end of the short-lived diversion of the Dubai debt crisis.

In the first of three days of employment figures the ADP National Employment report concluded that 169,000 private sector jobs were lost in November.

The drop was the smallest since July 2008 but still exceeded expectations which were around 150,000 to 160,000. This eighth straight, minor, decline suggests that we should get used to the idea that the recovery process will be a long one.

The US economy has now shed a total of 7.3 million jobs since the recession began in December 2007, the biggest slump since the Great Depression.

‘The labour market is crawling towards stabilization. We need the labour market to improve to generate the wage income necessary to support spending.’ said Ryan Sweet a senior economist at Moody’s Economy.com in Pennsylvania. [1]

Of course this report only serves as the appetiser for the non-farm payroll figures out on Friday and it’ll be interesting to see how investors will react to these.

Troubled carmaker GM saw the resignation of CEO Frederick Henderson after directors concluded he hadn’t delivered the results and changes they had expected.

Ed Whitacre, chairman and now interim chief executive, said in a brief statement: ‘I have taken over the role of chairman and CEO while an international search for a new president and CEO begins immediately.’ [2]

Shares in food giant Kraft were up 1.33% at $26.71 in early trading after it disclosed that it had secured an important $4.5 billion three-year credit agreement yesterday.

Shares in Boeing were up too at $54.12 (+0.74%), as it emerged that its competing bidder for a $50 billion contract with the US Air Force, Northrop Grumman Corporation, might withdraw from the bidding process.

By 3.15pm (London time), the Dow Jones Industrial Average had risen further and was trading up 36.58 points (+0.35%) at 10508.16, while the broader S&P 500 was also up 5.83 points (+0.53%). The Nasdaq was also in positive territory, up 21.09 points (+0.97%) to 2196.90.

Investors will be looking out for when the Federal Reserve releases its latest Beige Book later today at 2pm (EST).

[1] Source: Bloomberg News (2 December)
[2] Source: Financial Times (2 December)

By Anthony Grech, Research Analyst, IG Index.

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