GO
Loading...

Futures Rise as Jobs Report Pressures House

CNBC.com
Friday, 3 Oct 2008 | 9:27 AM ET

Futures pointed to a higher open on Wall Street Friday after the September employment report showed payrolls were cut more than expected, something that is likely to ratchet up pressure on the House to pass the bailout bill when it votes later today.

“They were lousy payroll numbers which made the passage of the bill even more certain and that’s, I think, how the market played that,” Art Cashin, director of floor operations at UBS, told CNBC.

U.S. employers cut nonfarm payrolls by 159,000, the steepest rate in 5 1/2 years, in September. Payrolls have now contracted for a ninth striaght month. Economists had expected to see payrolls shrink by 100,000. The unemployment rate was unchanged at 6.1 percent, as expected.

Once the bailout plan moves through Congress, the “focus is gonna turn from this bailout plan to the fundamentals -- and the fundamentals aren’t pretty right now,” Art Hogan, chief market analyst at Jefferies, told CNBC.

The market had a lot of other stuff to chew on today, with news that Wachovia and Wells Fargo will merge and that AIG will sell some business units as it looks to streamline operations.

Citigroup shares were tumbling as the company was the odd bank out of the Wells Fargo takeover of Wachovia, which Citi had been pursuing. Wells Fargo is getting Wachovia in an all-stock transaction worth $15.1 billion.

Wachovia shares gained about 40 percent in premarket trading, Wells was up about 1 percent and Citi fell nearly 10 percent.

In other big news before the jobs report, American International Groupsays it will sell off a number of business units, while retaining its U.S. property and casualty and foreign general insurance businesses, in an effort to become a smaller, more nimble company.

AIG shares gained 11 percent premarket.

Money markets remained tight ahead of the vote and speculation on coordinated rate cuts increased. But Trichet told CNBC in an exclusive interview that the ECB's only priority was maintaining price stability, and the bank's monetary policy would serve that purpose.

Still to come today: The ISM non-manufacturing index, a gauge of service-sector activity, will be released at 10 am ET and is forecast at 50 in September, from August's 50.6, according to Briefing.com.

In other signs that the credit crisis is spreading, California is fast running out of cash and may need as much as $7 billion in aid from the Treasury Department within weeks, the Los Angeles Time reported, quoting a letter from California Governor Arnold Schwarzenegger to Treasury Secretary Henry Paulson.

Asian stocks closed down and European stock markets were in the red as UBS said it will reorganize its troubled investment bank, closing most of its commodities business and cut a further 2,000 jobs.

European Central Bank President Jean-Claude Trichet said on Friday the $700 billion bank bailout plan must be passed by the House and urged European Union governments act swiftly to contain the crisis.

  Price   Change %Change
AFF
---
C
---
WFC
---