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Futures Turn Mixed After Jobs News; Dollar Rises

CNBC.com
Friday, 5 Nov 2010 | 9:26 AM ET

Stock index futures were mixed as the dollar rose after the government reported a surprising surge in October nonfarm payrolls.

Futures had been lower before the report after stocks reached two year highs on Thursday. The jobs news is the latest in a big week for the U.S. economy which saw Republicans win control of the House of Representatives and the Federal Reserve announce it would buy $600 billion in additional bonds.

Payrolls rose by 151,000in October, up from a decline of 41,000 the month before, thanks to a surge of 159,000 in private sector employment. Government payrolls slipped by 8,000. The unemployment rate remained steady at 9.6 percent.

Economists had expected a 60,000 rise in nonfarm payrolls, and a 75,000 gain in private employment.

A rise in the dollar after the news may have tempered gains in the futures market, as stocks have been moving inversely to the dollar in recent weeks.

"It's safe to say today's number is the October 'surprise' so many on Wall Street were expecting," said Todd M. Schoenberger, managing director, LandColt Trading.

"Now that we have the influential quantitative easingpackage in place, the country should expect a continued thaw of the frozen labor iceberg throughout the rest of the year and deep into 2011," Schoenberger said. "The 'wealth effect' is clearly improving and should signal positives for consumer discretionary budgets, especially leading into the holiday shopping season."

September pending home sales comes out at 10 a.m. and a consumer credit report for September will be released at 3 p.m.

In earnings news, Toyota raised its full-year outlook for the second time after Japan's subsidies to stimulate demand helped almost double quarterly earnings.

American International Group slumped after the insurer reported losing more than $2 billion in the third quarter because of charges and losses from asset sales. AIG also reported it expects to close its recapitalization plan to reduce the government's stake in the company to just about 92 percent.

Kraft shares slumped a day after reporting weak revenue for the third quarter, and said it may lose business selling Starbucks coffee. Starbucks, meanwhile, raised its forecast for the full year.

Beazer Homes fell after reporting a surprising drop in third quarter earnings as the sluggish economy continued to drag down homes sales.

European banks were lower after

Royal Bank of Scotland

reported earnings and

HSBC

published a trading update.

RBS said it saw a challenging fourth quarter, while HSBC said profits so far this year were "well ahead" of 2009 levels, but traders said the trading update had not impressed the market.

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SBUX
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HSBA
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LINTA
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