Trader Talk

Fallout From the Awful Jobs Report

Stock futures, already, down 9 points, dropped an additional 10 points as nonfarm payrolls came in at zero job gains, below expecations of a gain of 70,000. Average hourly earnings were down 0.1 percent, worse than expectations of a gain of 0.2 percent.

This will increase the confidence of the crowd that argues we are heading into another recession—specifically that third-quarter gross domestic product will go negative.

Earlier, all European indices opened lower on word Thursday that Greece will overshoot its 2011 budge deficit target by at least one percentage point, and its privatization plan is seriously in doubt, and added doubts on Italy's commitment to its austerity plan, which will be submitted to Parliament next week for debate.


1. Banks have been the weakest group all morning, beginning with European banks: ING and Deutsche Bank down 3 percent, but U.S. banks also moved south after the jobs report: Citigroup down 4 percent, Goldman Sachs down 2 percent...but most stocks are down 2 percent pre-open.

2. Bank of America falls 6 percent after The Wall Street Journal reported that the Federal Reserve has requested the bank to submit a contingency plan on what would be done if its business conditions worsen.

3. Separately, The New York Times reported that the Federal Housing Finance Agency is planning to sue "more than a dozen" financial firms, including Bank of America, JPMorgan Chase, and Goldman Sachs, for billions of dollars, accusing them of misrepresenting mortgage-backed securities at the height of the housing bubble.

4. Campbell Soup is up 5 percent after its fourth-quarter earnings tops estimates (43 cents a share vs. 38 cents a share consensus) on slightly higher-than-expected sales. Lower promotional spending help boost earning, but soup volumes continued to decline. The food maker also cuts its current year sales growth to flat to up 2 percent and now sees earnings per share falling 5 percent to 7 percent, instead of its previously forecasted 5 percent to 7 percent increase.

5. Netflix falls 9 percent after failing to renew its deal with Stars Entertainment as the firms remained far apart on a licensing fee agreement. After the existing deal expires in February, Netflix subscribers will not be able to view streaming video of new movie releases that Stars distributes from film studios Sony and Walt Disney.

6. Here's something that might cheer you up: Financial newsletter analyst Mark Hulbert notes that one of the most eminent of all writers, Sam Eisenstadt, remains bullish, forecasting an 18 percent return for the Dow Jones Industrial Average over the next six months. Eisenstadt was the research director at Value Line for 63 years before retiring recently; the Value Line Investment Survey was in first place for risk-adjusted performance over the three decades the Hulbert Financial Digest had been tracking advisory performance.

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