Stock Market Update - Friday, September 3, 2010 Morning Outlook

Stock Market Update
Friday, September 3, 2010
Commentary by Benjamin Train
Director, Online Consultancy Network

Latest News Headlines:

Best Pre-Labor Day Run Since 1990

Dow Jones 10,447.93 +127.83 (1.24%)
S&P 500 1,104.50 +14.40 (1.32%)
Nasdaq 2,233.75 +33.74 (1.53%)


The Dow Jones Industrial Average gained 106 points, or 1%, to 10426 in afternoon trading, sending the Dow up 2.7% on the week--its first positive showing since the beginning of August and the measure's best pre-Labor Day run since 1990.

Volume was light, with about 2.3 billion shares changing hands in NYSE composite trading as of 1:40 p.m. EDT.

The U.S. Dollar Index DXY Declined, Now 82.04 Down -0.43 (-0.52%).
Today's Range: 82.04 - 82.53.

The U.S. dollar dropped sharply after news that non-farm payrolls in the U.S. fell by 54,000. The Dollar index reflecting the U.S. currency against a basket of six others, declined 0.5%. Treasurys slipped, pushing the yield on the 10-year note up to 2.70%.


Job Losses Continue To Mount in the U.S.
Job losses continue to mount in the U.S. last month, though at a more modest pace than expected, putting further pressure on policy makers to take action to spur growth and employment. Private-sector companies add 67,000 jobs, following an upwardly revised 107,000 gain in July.

Stocks give up a portion of their gains after the ISM's August non-manufacturing index drops more than expected, throwing a bit of cold water on investors' early buying spree triggered by a better-than-expected payrolls report.

Institute for Supply Management's non-manufacturing purchasing managers' index falls to 51.5 in August, from 54.3 in July, falling short of expectations for a reading of 53.0.


US Stocks Pile On Gains As Jobs Data Boosts; DJIA Up 101

Dow Jones 10,401.31 +81.21 (0.79%)
S&P 500 1,099.70 +9.60 (0.88%)
Nasdaq 2,223.25 +23.24 (1.06%)
Dow Jones 10:30 AM Averages: DJIA 10,378.27 UP 58.17

30 INDUS 10,378.27 UP 58.17 OR 0.56%
20 TRANSP 4,390.69 UP 48.66 OR 1.12%
15 UTILS 397.22 UP 0.35 OR 0.09%
65 STOCKS 3,627.64 UP 22.93 OR 0.64%

U.S. stocks climbed on Friday after job losses slowed more than expected in August, boosting hopes that the economic recovery is still on track. The nation lost 54000 net positions last month, the US reports. Once-growing manufacturers shed jobs last month, as did budget-strapped state governments and the Census Bureau.

The Dow Jones Industrial Average surged 101 points on Friday, adding early to a week of gains. After a bruising August, the measure has already climbed 2.6% this week, as traders have seized on to encouraging manufacturing and jobs data as signs that the economy may still avoid a double-dip recession.

This is the third month that U.S. has shed jobs, with the unemployment rate hovering at 9.6%. The administration wants to pump more money into the economy, although details about how to boost job growth are in short supply.

The Wall Street Journal has reported that the administration is considering tax cuts and a new nationwide infrastructure program.

The Nasdaq Composite gained 1.2% to 2226. The Standard & Poor's 500-share index rose 0.9% to 1100, climbing above the key 1100 level. The Dow rose 0.9% to 10423, led by a 2.3% jump in Bank of America.

The benchmark indexes soared Friday after a snapshot of August's labor market was less bleak than expected.

Nonfarm payrolls fell 54,000 last month, matching the level of revised losses recorded the previous month, the U.S. Labor Department said Friday. Economists had predicted a drop of 110,000. The unemployment rate, calculated using a separate household survey, edged up to 9.6%, as expected, after holding at 9.5% for previous two months.

Traders said the private sector's addition of 67,000 jobs boded well for the recovery's sustainability.

"It's really going to be the private sector that's got to kick in for this to be sustainable," said Ed Crotty, chief investment officer at Davidson Investment Advisors.

Demand for safe-haven Treasurys slipped. The 10-year note fell, pushing its yield up to 2.74%. The dollar weakened against the euro, but strengthened against the yen. The euro was trading recently at 1.2861, up from $1.2822 late Thursday in New York. Crude-oil prices rose above $75 a barrel, while gold futures declined.


Job losses continued to mount in the U.S.

Job losses continued to mount in the U.S. economy last month, though at a more modest pace than expected, putting further pressure on policy makers to take action to spur growth and employment. One year ago the official unemployment rate was 9.7%. Today it is 9.6%.One year ago U-6 unemployment was 16.8%. Today U-6 is 16.7%

Nonfarm payrolls fell by 54,000 last month, matching the level of revised losses recorded the previous month, the U.S. Labor Department said Friday. The revision in July layoffs to 54,000 followed an original estimate of a 131,000 drop in payrolls.

The U.S. economy has shed jobs for three straight months, though the losses in August were about half the 110,000 predicted by economists in a Dow Jones Newswires survey.

Professional and business services payrolls rose 20,000. Construction, a sector of the economy that has struggled, added 19,000 jobs, as well.

Total government employment, which includes state and local jobs, fell 121,000. The declines were a result not just of the letting go of 114,000 census workers, but also job cuts by state governments facing budget pressures.


The Opening Bell
The Dow Jones Industrial Average (DJIA) is headed for an opening gain of nearly 100 points, as Wall Street cheers news that the US economy added 67,000 private sector jobs in August. As for the S&P 500 Index (SPX), futures on the broad-market index are pointing toward a gain of almost 11% percent....Financial, Technology Sectors Lead Broad Stock Market Advance. Nasdaq Up 26; S&P 500 Up 10, Above Key 1100 Level


Before The Bell
Futures on major US stock indices point to a higher opening on Friday after non-farm payrolls for the month of August fell less than expected. US futures rise on jobs data. US Lost 54000 Jobs in August; Rate Rose to 9.6%.


Friday Morning Outlook:

Headlines say investors unwilling to stake bold positions ahead of U.S. non-farm payroll figures for August, but I am expecting the market to continue showing progress into next week. By raising the analysts expected increase in jobless Americans, they have made it easier to report a "positive" number in the face of bad news. One year ago the official unemployment rate was 9.7%. Today it is 9.6%.

Unemployment is still at unacceptable levels in the US
More than 20% percent of America's unemployed have been dropped from the reported numbers. They have no probability of finding meaningful employment. The only jobs that are now available in the US are for temporary low income labor, low income retail jobs, and illegal aliens who don't pay taxes, or social security.

The only reason that extended unemployment benefits are being funded by Congress is to support the Banks. Remember that the private sector citizens of the US now have $42 trillion dollars of private debt. Guess what would happen if they stopped making their credit card and bank payments.

Have you read the list of Failed U.S. Banks and Credit Unions as of August 20, 2010
http://ocnww.blogspot.com/2010/09/bank-failure-list-update-september-1.html

Another increase in initial claims for unemployment benefits reported Thursday by the U.S. Labor Department underlined the troubles facing the labor market. The claims data come on the heels of a disappointing July employment report that showed just a small increase in jobs excluding the effect of layoffs related to the decennial census.

"If claims remain at their current level, then even the modest recent gains in private payrolls will not be sustained," said Ian Shepherdson of High Frequency Economics. When asked about the biggest risk facing the economy, "too few jobs, too little wage income and too little consumer spending" was the most popular choice.

Issues such as inflation, deflation, state and local government cutbacks and another downturn in housing garnered just a handful of responses each.

The Federal Open Market Committee (FOMC) that met in June reported that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.

Now ask yourself, why did the Dow Rise Friday on bad news? Because they wanted to close the week in the green, but to do that, they had the lower the US Dollar value. The rest is spin the news as usual and forget that America can't borrow from banks to save their homes. Forget that almost every unemployment number and GDP number is a lie. "Too few jobs, too little wage income".

How can the US GDP exist if American's don't manufacture anything?

US Markets will be closed Monday, September 6, 2010, for Labor Day Weekend.



Canadian Market:

Toronto Stocks Slightly Higher At Midday

The stock market was slightly higher at midday Friday, as lower-than-expected job losses in the U.S. further bolstered the improving economic outlook. However, a decline in the mining sector limited gains amid lower spot gold prices and a brewing bidding war among mining companies.

At 11:45 a.m. EDT (1545 GMT), the S&P/TSX Composite Index was up 15.90 points, or 0.13%, at 12126.99. Advancers edged out decliners 686 to 604. Trading volume was 219.0 million shares. The S&P/TSX 60 Index was up 0.66 points, or 0.1%, to 706.70

Canada Dollar Ends Sharply Higher After Strong US Jobs Data
The Canadian dollar ended sharply higher Friday, gaining about 1.5% against the U.S. dollar, after better-than-expected U.S. jobs data for August boosted sentiment on the economic prospects for North America.

The U.S. dollar was at C$1.0392 at 3:29 p.m. EDT (1929 GMT), from C$1.0554 at 8:00 a.m. EDT (1200 GMT) and C$1.0543 late Thursday.

Canadian Bonds Decline
Canadian bonds declined sharply on Friday.

"We had a big pop in the equity markets post-payrolls, mirrored by a big selloff in bonds," said Bill Girard, vice president of fixed income at Scotia Asset Management in Toronto. "Weaker-than-expected ISM data took a little bit of the glow off."

Canada's two-year bond yield was at 1.349%, from 1.264% late Thursday. The 10-year bond yielded 2.932%, from 2.865%. Bond yields and prices move in opposite directions.

It was the third straight day of major selloffs in Canadian bonds, which Eric Lascelles, chief Canada macro strategist at TD Securities in Toronto, says is "more than a blip. It suggests that market sentiment has shifted a little."

Canada's central bank meets Wednesday, when it is largely expected to raise interest rates by 25 basis points. It would be the third rate hike since June, when the Bank of Canada became the first central bank in the Group of Seven industrialized nations to raise interest rates since the onset of the global financial crisis. Canada's central bank to raise its overnight target rate to 1% on Wednesday.

The bond market will be closed Monday.
Coupon Matures Price Direction Yield (Today vs Yesterday)
2.00s 2012 101.253 dn 0.186 1.349% vs 1.264%
2.50s 2015 101.916 dn 0.375 2.070% vs 2.000%
3.50s 2020 104.773 dn 0.688 2.932% vs 2.865%
5.00s 2037 124.718 dn 1.087 3.563% vs 3.520%
10-Yr Spread to U.S. +22 vs +24


Toronto Indexes; 1 PM EDT Composite Up 18.65

1 PM EDT Toronto Indexes

S&P/TSX Composite 12129.74 up 18.65 or 0.2%
S&P/TSX 60 Index 707.12 up 1.08 or 0.2%
Financials 175.14 up 2.14 or 1.2%
Materials 379.32 off 3.78 or 1.0%
Energy 278.95 up 0.06 or 0.0%
Industrials 103.78 up 0.72 or 0.7%
IT 27.45 up 0.10 or 0.4%



South American Markets:

Mexico:

Mexican Stocks Uptrend Continues
Mexico's August Consumer Confidence 88.7 Vs 81.5 Year Ago

Mexican stocks rose 0.7% in early trading Friday and the peso strengthened against the U.S. dollar as employment news in the U.S. was not as bleak as expected, keeping hope alive that Mexico's export sector will continue to be a motor for growth.

The IPC index of the 35 leading stocks rose 232.5 points to 32,648 points at around 10:45 a.m. EDT. Volume was 49.7 million shares worth MXN1.14 billion ($88 million).

The Mexican peso appreciated against the U.S. dollar and was quoted in Mexico City at MXN12.9585 versus Thursday's close of MXN13.0340. Currency analysts said in research notes that they continue to be bullish on the peso over the long-term given current valuations.


Brazil:

Brazilian stocks rose at the start of trade on Friday following news that Brazil's economy grew a torrid 8.8% last quarter and that U.S payroll data was better than expected. Market bellwether Petroleo Brasileiro (PBR, PETR4.BR), or Petrobras, led the local bourse higher as its plans for a massive share sale moved forward.

The Ibovespa index was 0.9% higher at 67,426 points in Sao Paulo. Data released at home and abroad increased appetite for local stocks.

The Brazilian Census Bureau's announcement Friday morning that Brazil's economy expanded 8.8% in the second quarter on the year before was better than expected. In the U.S., nonfarm payrolls fell by 54,000 last month, better than the loss of 110,000 economists had predicted.

Investors moved into Petrobras as more details of the massive share sale due later this month came out. Petrobras is planning to sell at least 3.75 billion shares to finance a massive investment program over the next five years.

The company's shares were 2.4% higher at 28.27 Brazilian reals ($16.41). Shares in miner Vale SA (VALE, VALE5.BR) were 1.0% higher at BRL43.28 on the continued improved prospects for the global economy.

In the banking sector, top private bank Banco Itau Unibanco (ITUB, ITUB4.BR) rose 1.1% to BRL38.32, and rival Bradesco bank (BBD, BBDC4.BR) was up 0.2% at BRL38.74.



European Markets:

European Stocks Up
European stocks advanced Friday, rallying in the wake of better-than-expected employment data out of the U.S.

The U.K. FTSE 100 index closed up 1.1% to 5,428.15 points, with shares of Barclays PLC up 4.2%.

The Stoxx Europe 600 index, which was up just 0.4% before the data, finished up 0.9% to 260.40. The index clocked gains of 3.7% this week after a lackluster performance in August.

European stocks are upbeat, helped by positive euro-zone economic data, but volumes are low as investors wait for the all-important U.S. nonfarm payrolls figures due later in the session.

Stoxx Europe 600 index was up 1.3% in early afternoon trading. Europe Factors-Shares set to inch up ahead of payrolls. FTSE up for sixth day, U.S. payrolls in focus.

Base metals are continuing to edge higher on the London Metal Exchange Friday, supported by firmer equities and a weaker dollar ahead of a key U.S. employment report.

European Central Bank executive board member Jose Manuel Gonzalez-Paramo warned Friday that banks could become addicted to the easy money offered by the ECB.

"The danger exists that the support offered to the financial system at a time of stress morphs into a lasting dependence of banks on central bank financing," Gonzalez-Paramo told a conference in Limassol, Cyprus. "Such support may also increase the direct financial and balance sheet risks of the central bank itself," he added. He also said that the excess liquidity created may add to inflation if it isn't withdrawn "in a timely and effective manner once broader economic conditions normalize."

Gonzalez-Paramo was speaking a day after the ECB decided to extend its provision of unlimited liquidity at its one-week and three-month operations until year end at the earliest, and for "as long as is necessary".

At his regular post-meeting press conference, ECB president Jean-Claude Trichet had faced direct criticism that the policy, by helping to keep unviable banks afloat, was obstructing a clean-up of the banking sector and generating extra costs for taxpayers, notably in Ireland.

When E.U. ministers assemble for their first meeting after a summer break, an unpleasant reality will be on the agenda, despite billions of dollars in promised loans, yields on the bonds of Europe's wobbliest countries have spent their vacation rising.

The European Commission clears a Greek plan to recapitalize banks through the Hellenic Financial Stability Fund. The Fund has a capital of €10b and forms a part of the financial stability package reached with the IMF and the EU.


Germany:
Germany's DAX-30 rose 0.8% to 6,134.62 points, led by shares of Daimler AG, up 1.6% and Man AG, up 2.1%;

Also on the DAX, shares of Merck KGaA rose 2.8% after the group said its Cladribine tablets for the treatment of relapsing-remitting multiple sclerosis had been approved in Australia.


France:
The French CAC-40 index rose 1.1% to 3,672.20 points, helped by a 3.7% gain for shares of Societe Generale, a 3.3% rise for Credit Agricole and a 2% rise for BNP Paribas.


Belgium:

Belgium's bid to form a government collapsed Friday, putting fractious Dutch- and French-speaking politicians back on a collision course.

The figurehead for Belgium's Flemish separatists, Bart De Wever, said negotiations had broken down after francophone Socialist leader Elio Di Rupo quit seven-party talks to travel to see King Albert II.

New Flemish Alliance, or NVA, boss De Wever said in a statement that his party "regrets that the respective positions of the Flemish and the francophones could not be brought closer," accusing Di Rupo of presiding over a "missed opportunity."

Di Rupo threw in the towel after failing to land a breakthrough three months after elections gave proponents of a breakaway, a chance to establish its own sovereign government.

In a clear echo of the difficulties which beset separate stints in charge for current caretaker premier Yves Leterme, Di Rupo had already offered to stand down from his royal mission on Sunday.

He warned Monday that the country of 10 million people, the permanent home to the European Union and NATO, risked a descent into "political chaos" if a deal carving up monies and voting rights couldn't be agreed across linguistic divides.

Charles Picque, an official with the state government in Brussels region, one of three alongside wealthy Flanders and Wallonia, told AFP that he saw no chance of the king asking Di Rupo to try again.

The Netherlands' fiscal shortfall is set to widen to 6.6% of gross domestic product this year from 5.3% in 2009, taking the country's public debt to 66% of GDP.

Analysts worry that the inconclusive June 9 elections may frustrate efforts to produce a strong government, potentially thwarting or delaying necessary reforms to fix public finances.

It is unclear what will happen. The Queen of the Netherlands will consult political leaders and her advisers. Rutte said he will advise to draw up his own government policy plans, which should than form the basis of the formation of a coalition government.



World Wheat Estimate 641.2M Tons
World wheat production is expected to fall to 641.2 million metric tons in 2010-11, FO Licht said Friday, down 4 million tons from its previous prediction.

Dramatically shifting production is dividing the world grain market into "have and have-nots," with exporters likely to reap the benefits of higher prices, a Germany-based analyst said Friday.

World wheat production is expected to fall to 641.2 million metric tons in 2010-11, FO Licht said Friday, down 4 million tons from its previous prediction and 4.9% from last year.

Production in the drought-ravaged Commonweath of Independent States is expected to drop to 84.9 million tons, down almost a quarter from the 2009-10 crop season and 3.3% lower than the German analyst's August prediction.

The European Union's crop is also expected to suffer, with production expected to fall to 135.90 million tons, compared with 139.39 last year.

Wheat output in North America is expected to make up some of the shortfall. It is seen producing 87.7 million tons, with Canada's estimate at 22 million tons, up 2 million tons from FO Licht's previous estimate.

FO Licht said the fundamentals of the market have been drastically altered by weather conditions in the past two months, with previously "burdensome" supplies now rationed through higher prices.

"It is a testament to strong growing global demand that the third largest wheat crop harvest is nearing an end and the largest maize crop in history will soon be harvested, but prices continue to rally," said analyst Keith Flurry.



Russia:

The Russian Economy Ministry will insist on a formula to calculate nickel export duty which would effectively remove extra profit margin earned by exporters, especially when prices go above $15,000-$17,000 per metric ton, Deputy Economy Minister Alexey Likhachev said at a briefing in Moscow Thursday, as quoted by the ministry's press service.


Asian Pacific Markets:

Asian shares up with mixed results; Shanghai Composite down, Hang Seng up, Nikkei 225 up.

Nationwide power rationing in response to Beijing's call to conserve energy and reduce emissions has led to a short-term supply shortage of nickel pig iron and an uptick in its domestic prices, industry participants said Friday.


New Zealand:

SPECIAL REPORT:
Magnitude 7.4 Earthquake Hits South Island of New Zealand
Strong earthquake rocks New Zealand's South Island

Quake Located 4 Miles South, Southeast From Christchurch

A magnitude 7.2 earthquake rocked New Zealand's second largest city Christchurch early Saturday, causing widespread damage including the collapse of some buildings and power outages, witnesses and the U.S. Geological Survey said.

The quake struck at a depth of 10 miles some 19 miles northwest of Christchurch at 4:05 a.m. local time Saturday, the USGS said.

Aftershocks were ongoing and damage widespread in Christchurch, local newspaper The Post reported, while there appeared to be a power outage throughout the city of about 340,000.

Local resident Colleen Simpson said that many people had run out onto the streets in fear, while the mobile phone network was failing, according to the Post.

"Oh my God. There is a row of shops completely demolished right in front of me," Simpson said.

Kevin O'Hanlon, from Mairehau in Christchurch, said: "Just unbelievable. I was awake to go to work and then just heard this massive noise and, boom, it was like the house got hit. It just started shaking. I've never felt anything like it," the newspaper reported.

The damage included structural harm to houses, broken glass and damaged bridges and vehicles, the Post said.

Civil defence staff were deciding whether to activate the national crisis centre, Radio New Zealand reported.

An aftershock of magnitude 5.7 was felt at 4:53 a.m. local time, the USGS said, while local media said a series of shocks continued to roll across the city.

The quake was felt through much of New Zealand's South Island where Christchurch is located on its east coast, the Post said. There was no widespread threat of a tsunami, according to the Pacific Tsunami Warning Center. An earthquake of this magnitude could generate a local tsunami, the center said.

"Earthquakes of this size sometimes generate local tsunamis that can be destructive along coasts located within a hundred kilometers of the earthquake epicenter," the center said. "Authorities in the region of the epicenter should be aware of this possibility and take appropriate action."

New Zealand lies at the southern end of the so-called Pacific Ring of Fire, and above an area of the Earth's crust where the Pacific Plate converges with the Indo-Australian Plate.

The country experiences more than 14,000 earthquakes a year, of which only around 20 have a magnitude in excess of 5.0.

Radio New Zealand reported that the quake was felt as a long rolling motion lasting up to 40 seconds, and that the area was continuing to feel aftershocks. The USGS said one aftershock had a magnitude of 5.7.


Australia:
One of Australia's and the world's most prospective gold companies, Andean Resources, has become the subject of a bidding war between two Vancouver-based global gold majors.

SPECIAL REPORT:
UN Calls for Food Price Summit

The United Nations' food agency has called a special meeting of policy makers to discuss the recent rise in global food prices. The announcement came after Russian Prime Minister Vladimir Putin extended the country's ban on grain exports on Thursday. This added to fears that prices of food staples would continue to rise.

The meeting will take place on 24 September, probably in Rome, the UN Food and Agriculture Organization said.

"In the past few weeks, global cereal markets experienced a sudden surge in international wheat prices on concerns over wheat shortages," the agency said. "The purpose of holding the meeting is for exporting and importing countries to engage in constructive discussions on appropriate reactions to the current market situation."

Mr Putin did not say when exactly the Russian grain export ban, originally to run from 15 August to 31 December, would be lifted, but said that it would not be before next year's harvest had been reaped.

Russia is one of the world's biggest producers of wheat, barley and rye and was hit hard by a drought this summer. The heatwave destroyed crops in many parts of the country, pushing food prices up.

This year's crop could be as low as 60 million tonnes, but Russia needs almost 80 million just to cover domestic consumption, analysts say. Other key grain producers have also reported shortages, causing the price of wheat to rise more than 50% since the beginning of July.


Food Supplies

Grain prices on commodity markets shot to near two-year highs last month as investors digested worsening news of the Russian harvests. The FAO is concerned at the speed at which prices have increased over the last two months.

Its economist, Abdolreza Abbassian, said the latest Russian move to extend the ban would prolong the "volatility and anxiety" already on the markets. But the UN agency has stressed throughout that the situation is very different to the food crisis two years ago.

Prices are currently lower, production levels higher and stocks more abundant than during the 2007-8 period, when shortages sparked riots across the world. "It still does not mean that we are going to have a crisis," Mr Abbassian said.

"It does highlight a very big problem here: a very large exporting country with a great influence on the market can make unilateral decisions like that. It causes disturbances of the market." Analysts suggest that fierce competition could soften the impact on consumers, as retailers and producers will be reluctant to pass on in full higher raw material costs to shoppers.

Some big food companies have also already signed future supply contracts at prices that are lower than on international commodity exchanges. But any rises will be felt more keenly in developing countries, where food makes up a bigger proportion of household spending.

A 30% rise in bread prices has already triggered riots in Mozambique this week in which seven people died. "There are other issues at play there - which is not uncommon in poorer countries. Even a small increase in the price of food, which is so important to them... can spark a problem," Mr Abbassian told BBC World News.

"Food prices, and wheat in particular, are so important for food security and even the political stability of countries."

Read the Original Article here: http://www.bbc.co.uk/news/business-11177346




World Markets Snapshot:

Shanghai	2,655.39	-0.38 (-0.01%)
Nikkei 225	9,114.13	+51.29 (0.57%)
Hang Seng Index	20,971.50	+102.58 (0.49%)
TSEC	7,830.21	+109.39 (1.42%)
FTSE 100	5,435.79	+64.75 (1.21%)
DJ EURO STOXX 50	2,763.87	+48.60 (1.79%)
CAC 40	3,696.00	+64.57 (1.78%)
S&P TSX	12,111.09	0.00 (0.00%)
S&P/ASX 200	4,541.20	+8.50 (0.19%)
BSE Sensex	18,221.43	-16.88 (-0.09%

Market Summary:

Stocks:

Stocks rose Thursday as investors awaited official monthly jobs data on Friday. The gains came after better-than-expected housing and retail data provided some encouragement, but caution prevailed following Wednesday's big run-up.

US Markets will be closed Monday, September 6, 2010 for Labor Day Weekend.

White House Officials To Visit China On Recent Tensions

U.S. National Economic Council Director Lawrence Summers and Deputy National Security Adviser Thomas Donilon will travel to Beijing this weekend for high-level talks, as the U.S. and China work to iron out tensions on issues ranging from currency policy to military ties to Iran.

Washington and Beijing have disagreed over how to handle Iran's nuclear issues. The White House officials, scheduled to arrive Sunday and stay until Wednesday, are to exchange views with top Chinese officials on "U.S.-China relations and other important issues of mutual concern," Chinese Ministry of Foreign Affairs spokeswoman Jiang Yu said at a regular press briefing in Beijing Thursday. She didn't elaborate.

The planned visit by the White House delegation--also expected to include Jeff Bader, the U.S. National Security Council's senior director of Asian affairs--comes as strains between the U.S. and China intensify on a number of issues after a period of improving ties earlier this year.

Mr. Summers' meetings with his Chinese counterparts are likely to include discussion of China's currency policy amid mounting frustration in Washington that Beijing's announcement in June that it would make the exchange rate more flexible has yielded minimal change. The yuan has gained less than 0.3% against the dollar since the change was announced June 19, and many U.S. politicians believe China is continuing to suppress its value to benefit its own exporters.

Earlier this week, Hu Xiaolian, a deputy governor of the People's Bank of China, held out little prospect of more rapid appreciation of the yuan in an interview with The Wall Street Journal, saying that the currency "doesn't have a key role to play in rebalancing bilateral trade between the U.S. and China."

Chilean Economy Recovers From Quake

The Chilean economy seems to have survived one of the worst natural disasters in history and a recession practically unscathed and is poised to grow robustly in July on booming mining and industrial output.

The South American economy is quickly pulling out of its first recession in a decade and rebuilding after the devastating 8.8-magnitude earthquake that hit in late February.

Treasurys:

Treasurys weakened as the latest bout of better-than-forecast U.S. housing and employment data eased worries about the health of the economy, sapping demand for safe assets. The 10-year and 30-year maturities led the selling. The better data are "making people wonder whether being long at these yield levels is as much of a slam dunk as they thought a week ago," said Thomas Roth, executive director in the U.S. government bond trading group at Mitsubishi UFJ Securities (USA).

Forex:

US Dollar Index Futures DXY was mostly flat Thursday, Day's Range: 82.29 - 82.60, closed at $82.40. The US Dollar Index is retracing to test support after encountering resistance at 83.5. Failure of support at 80 would signal a decline to 76.5*, while recovery above 83.5 would indicate a rally to 89. The dollar was down modestly against the euro and yen. The monthly employment report has a strong effect on the dollar's performance. "People are sidelined right now, waiting to see the outcome of [Friday's] number," said Kazuo Shirai, vice president of foreign exchange trading at Union Bank in Los Angeles.

Gold is headed for another test of $1260; breakout would signal an advance to $1360.

Commodities
Crude Oil	75.34	+ 0.43%
Natural Gas	3.81	+ 1.49%
Gasoline	1.93	+ 0.29%
Heating Oil	2.07	+ 0.34%
Gold	1242.33	- 0.72%
Silver	19.62	+ 0.15%
Copper	3.52	+ 0.86%
Quotes delayed 15 min.		» Add to your site

Friday's US Economic Calendar:

8:30 a.m.
August Unemployment rate Non-Farm Payrolls (expected -110K), Unemployment Rate (expected 9.6%), Average Hourly Earnings (previous 22.59), Net Change (previous 0.04), Manufacturing Payrolls (previous +36K), Overall Workweek (previous 34.2), Net Change (previous +0.1), Service Producing Payrolls (previous -164K), Government Payrolls (previous -202K), Federal Payrolls (previous -154K), Private Payrolls (previous +71K)

10:00 a.m.
Atlanta Fed Pres Lockhart speaks in Jonhson City, Tenn.

10:00 a.m.
Aug ISM Non-Manufacturing report on business Non-Manufacturing PMI (expected 53), Non-Manufacturng Business Index (previous 57.4), Prices Index (previous 52.7), Employment Index (previous 50.9), New Orders Index (previous 56.7)

10:30 a.m.
Treasury Chief Economist Krueger holds briefing on employment data in Washington

3:00 PM EDT

Market closes for three day holiday, Labor Day Weekend