Halftime Report: Bracing For Friday's Jobs Number
BIG JOBS REPORT LOOMS OVER STOCKS
The Dow and S&P 500 were both trading around break-even mid-day Thursday ahead of the big jobs number – which comes out Friday before the bell.
The government's monthly tally of job losses is one of the most important economic indicators for the stock market.
On Thursday government data showed unemployment benefits unexpectedly fell for the first time in 20 weeks. The drop, while small, provided investors a nugget of hope that unemployment could be easing.
How should you be trading?
Instant Insights from the Fast Money Traders
The S&P is holding above the 200-day moving average as investors wait for the jobs number, explains Tim Seymour. I think it’s a good sign. If Friday's jobs number comes in anywhere above 500, I think you see a market rally.
Also the SPDR closed above 93, reminds Jeff Tomasulo. That’s also sign of strength.
Options trading suggests a lot of uncertainty right now, adds Jared Levy Peak 6. There are a lot of straddles out there – investors are buying calls and puts – it seems they’re banking on a big move in either direction.
GOLDMAN LEADS FINANCIAL HIGHER
Goldman Sachs led the financials higher after Bernstein analyst Brad Hintz upgraded the firm to "outperform" from "market perform," saying it will continue to seize "up for grabs" share in the fixed income market and benefit from a recovery in the sector.
He also said Goldman and Morgan Stanley will both gain from opportunities in the credit market, but Goldman will emerge as the "clear winner" during a credit recovery and normalization of the fixed income market.
I love the financials here, says Jeff Tomasulo of SMB. And from a technical perspective Goldman Sachs has been acting extremely well.
Oil prices rose more than 3 percent to above $68 a barrel on Thursday after Goldman Sachs raised its forecast for crude.
Specifically, Goldman raised its oil price forecast for the end of 2009 to $85 a barrel from $65 and introduced a new end-2010 forecast of $95. And in a research note analysts said the recent rally in U.S. crude is likely to be but the first stage.
It seems to me Goldman’s call on oil says we’re better in the resources spaces, says Tim Seymour.
In commodities, I’m watching silver , explains Jared Levy. The SLV has broken correlation with the GLD and theSLVis about 35% more volatile.
RETAILERS FALL FLAT
Consumer stocks fell after May same-store sales disappointed investors with department stores posting sharp declines, though the 9.1 percent drop at Macy's was slightly better analysts had expected. Nordstrom same-store sales fell a steeper than expected 13.1 percent and Neiman Marcus' comparable revenue plunged 23.3 percent, showing that luxury retailers continue to suffer.
The steepest sales decline came from Abercrombie & Fitch , whose same-store sales slid 28 percent, worse than the 24.1 percent decline analysts had expected.
Even stores that typically benefit from a weak economy, including Costco , Target and BJ’s posted steeper than expected drops.
How should you trade retail?
I think Wal-Mart looks pretty good here because I think we see a second bout of people being very frugal, muses Tim Seymour.
This is a sector that I would not trade, adds Jeff Tomasulo. I think technology, financials and commodities are better places to put money.
I’m seeing a big seller of the $12.50 puts in the Limited , adds Jared Levy. This gives investors more downside room.
CHART OF THE DAY: HOMEBUILDERS ETF DOWN
Technical analyst Dan Fitzpatrick is closely watching patterns in the Homebuilders ETF and says the XHB has dropped below the 200-day average. As a result, I’m looking for the homebuilders to trade lower, he reveals.
INTEL ACQUIRES WINDRIVER
Intel said Thursday it will buy software maker Wind River Systems Inc. for $884 million in an all-cash deal that will help the world's largest computer chip maker expand beyond the PC market.
Intel said the purchase will benefit its processor and software offerings for embedded systems and mobile devices, which run the gamut from smart phones to networking equipment.
Intel is one of those tech names with a big balance sheet and they’re using it to get into wireless, explains Pete Najarian. I think Intel and other big tech names could make even more acquisitions. Another company that could be looking is Dell , speculates Najarian.
TRADE TO GO
With rumors that Prime Minister Gordon Brown may be stepping down Tim Seymour suggests playing the turmoil in Britain. Put Barclays and HSBC on your radar, he counsels.
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Trader disclosure: On June 4th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders;
Tomasulo Owns (GS)
Seymour Owns (BAC)
Seymour Owns (FCX)
Levy Unwinding (USO)
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