Already markets are looking ahead to Friday's jobs report, as better U.S. economic data put some spring into stocks Monday.
Stronger manufacturing and consumer data, and a flurry of merger activity pushed the Dow up 1.3 percent to 11,151, its biggest one day gain since Feb. 16. The S&P 500 was up 15 points, or 1.3 percent to 1202. The Dow Transports took flight, gaining 2.9 percent to 4805, its highest close since September, 2008.
The ISM manufacturing survey was stronger than expected at 60.4, as new orders jumped to 65.7. Encouraging too was the ISM's employment index at 58.5, its highest level since January, 2005. That number could translate to 15,000 new jobs in Friday's April employment report, according to some economists.
Besides manufacturing, consumers are giving the economy a boost. Consumer spending rose 0.6 percent in March, the biggest jump in five months.
All this builds towards Friday's jobs report, which is expected to show that the economy created about 175,000 jobs in April. Data expected Tuesday includes pending home sales and factory orders, both at 10 a.m.
There are plenty of earnings Tuesday including Merck, Pfizer, Archer Daniels-Midland, Duke Energy, Marathon Oil, Cephalon, MasterCard, Baker Hughes, Tenet Health Care, Chesapeake Energy, and Marsh McCLennan.
Banks will be in the spotlight Tuesday as the Senate debates amendments to the financial regulatory reform bill, including one on separating their derivatives business. Also, Treasury Secretary Tim Geithner testifies before the Senate Finance committee at 10 a.m. on President Obama's proposed fee on financial institutions.
President Obama speaks to CEOs attending the Business Council meeting in Washington at 10 a.m.
Markets are also monitoring the Gulf of Mexico as oil continues to leak from a rig operated by British Petroleum. Oil was higher for a fourth day, pushed by positive economic news and also the spill. Oil was up $0.79 per barrel at $86.19.
Oil has drifted slowly higher, but if you look at forward months, the rise was more pronounced Monday. The July contract was at $89.15. August jumped more than 1 percent to $90.72, and the December contract was over $93, as traders bet oil will rise into the end of the year.
"I think it's impacting in a mild way," said Ray Carbone, president of Paramount Options, of the spill. But if the spill persists, and impacts shipping or production of oil in the gulf, the large inventories of oil could start to get used and that could impact prices.
"If that happens, I think there's still plenty of oil. It's not a question of oil. It's access to oil. They would draw down those inventories," said Carbone.
Carbone said he's watching the $87 zone closely. Oil rose slightly above that level Monday before drifting back down. "The last time we settled over $87 was October of '09, on the way down," said Carbone. "What's important is on the way up, when we settled above $87 for the first time ever, we went to $100."
Dan Yergin, chairman of Cambridge Energy Research, said the oil spill in Gulf, which started with an explosion nearly two weeks ago, has already changed the debate on off shore drilling.
"The Gulf of Mexico will continue to be a major oil province. What happens off any other coast now is just uncertain," he said. President Obama recently announced plans for off shore drilling along the mid-Atlantic and Southeast U.S. coasts, as well as in an area of Alaska.
Yergin said the spill could result in ramped up regulation for off shore drillers globally. "Everybody is going to go back, both governments and companies and review how they handle the unexpected events," he said.
"I suppose it puts a new emphasis on what was happening anyway, which is applying shale gas technology to oil development," he said. "The poster child for this is the Bakken shale formation."
Platts Monday said it would begin providing open-market spot price assessments of crude form the Bakken shale formation, which stretches across the central United States and parts of Canada. Platts Monday put spot prices of Bakken Blend ex-Clearbrook at $85.41 per barrel, and Bakken Blend ex-Guernsey at $85.41 per barrel.
"Ironically, during Hurricanes Katrina and Rita there were no leaks (from Gulf oil production). That showed the resilience of the system for many people at this point... The emphasis will be on the blowout protector. The blowout protector didn't protect," he said.
The rig disaster will certainly be the topic of discussion at the annual Offshore Technology Conference that is underway in Houston Tuesday. Nearly 68,000 energy professionals are expected to attend.
The rebound in U.S. economic data paints a contrast to Europe, where sovereign debt worries continue despite a 110 billion euro weekend rescue package for Greece. The euro lost nearly a percent to the dollar Monday, finishing at $1.3194. It is now down 8.5 percent against the dollar for the year so far.
"We broke down to make a new low of $1.3150 in the U.S. session," said Marc Chandler, chief currency strategist at Brown Brothers Harriman. "The problem is people are skeptical. It's buy the rumor, sell the fact. A lot of questions remain open, like what about Portugal?"
"Nobody has ever done this with a contracting economy. It's one thing to do belt tightening, but it's so much better to do it when you have real growth...The Greek government expects the Greek economy to show a 4 percent decline this year, and 2.6 percent next year, and it looks like it could be deeper than that and that's why the market is skeptical," he said.
Chandler said the market still believes that Greece could require a debt restructuring. As for the euro, it could keep falling. "I think we're going to below $1.20. it wouldn't surprise me if we were to got to parity. What the Europeans are doing on the periphery of Europe is they are squeezing out domestic aggregate demand. They are freezing salaries. They're laying off workers. They're freezing spending. They're raising taxes," he said.
The U.S. economy, meanwhile, is on the mend and that could become a driver for the dollar, he said, noting its been benefiting from a worse picture in Europe.
Credit Suisse economist Jonathan Basile says he's seeing some good news for unemployment in help wanted ads. He said the Conference Board's help wanted online ads are at their highest level since November, 2008. The online ads for April were at 222,700 versus a decline of 29,600 in March.
Basile expects April non farm payrolls of 165,000, with about 120,000 temporary census workers included in that figure.
He said the help wanted data has been a good indicator for the jobs report in the past. "We've gotten through a massive liquidation of labor in the recession, and it looks like it's time to restock. That's reflected in the sharp increase in the last couple of months in this help wanted index," he said.
"The measurement we get on the highest frequency on labor is jobless claims. We only see the layoff side on a weekly basis," said Basile. He said the help wanted index provides a different perspective, and Monster also has its own help wanted report. "They basically have been telling us the same thing..That labor demand is up and that companies need to hire back," he said.
Not long after Continental and UAL announced their much anticipated mergerl, car rental agency Avis Budget said it may top a $1.2 billion bid Hertz made for Dollar Thrifty Automotive . Continental was a late comer itself in talks between UAL and US Air.
Later Monday, Simon Property bid $5.8 billion for General Growth Property at $18.25 per share, more than double the $9 per shares it originally offered. General accepted an offer from a Brookfield Asset Management-led consortium but will now review the Simon bid.
These deals have a common theme in that companies see sense in outbidding rivals, suggesting they are less about forming marriages of desperation and more about an increased confidence in the economy and prospects for their businesses.
Goldman Sachs saw its stock rise nearly 3 percent Monday, after Friday's double-digit pummeling. Berkshire Hathaway CEO Warren Buffet, a big Goldman shareholder, said he doesn't think the firm did anything wrong. He also says the complicated financial transaction in the SEC case against Goldman is misunderstood.
Time will tell for Goldman, but it certainly is on a public relations blitz on other fronts. CEO Lloyd Blankfein did a lengthy interview with Charlie Rose, and the Financial Times reports Goldman plans to change the way it deals with institutional clients. According to the FT, Goldman is looking to tighten up its standards and is studying ways to make sure complicated securities are only sold to appropriate clients.
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