Dollar, Commodities Hit by Jobs Report

Bob Pisani is off; this post was written by CNBC producer Robert Hum.

S&P futures initially dropped about 10 points following a very poor non-farm payrolls report. July payrolls fell 131,000, more than double the 60,000 decline expected by economists. Government job losses were particularly notable. The key reading of private sector jobs also disappointed the Street (gain of 71,000 vs. gain of 83,000 consensus).

Equally discouraging was the hefty downwards revision to the June data. Payrolls dropped 221,000 in June, down from 125,000 as initially reported.

Following the jobs report, both the dollar and commodities fell (with the exception of gold), as commodities traded on worries of a sluggish economy, rather than in reaction to the currency movements.

The US wasn’t the only country to report disappointing job losses today. Earlier this morning, Canada reported a surprising loss of 9,300 jobs in July. Expectations were for a 15,000 gain. The country saw 139,000 full-time jobs lost in the month, but gained 129,700 part-time positions. The loss last month was the country’s first monthly jobs loss of the year and follows a strong 93,200 gain in jobs back in June.

Elsewhere:

a) Kraft Foods beat estimates ($0.60 vs. $0.52 consensus) as higher volumes helped offset some small weaknesses in pricing.

Sales in the US remained particularly weak. North American sales fell 1.3 percent compared to the 3.9 percent growth in European revenues and double digit growth in Latin America and Asia. The company blamed the U.S. weakness on the weak economy, “reduced merchandising by a key customer,” and higher promotional activity.

The consumer foods giant sees full-year earnings of “at least $2.00” vs. $2.03 consensus. However, more disconcerting, the Dow component lowered its organic sales growth estimate to 3 percent-4 percent from “at least 4 percent” earlier.

b) Excluding a goodwill impairment charge, AIG reported a better-than-expected Q2 profit ($1.99 vs. $0.99 consensus). The stock is trading up as the insurer’s CEO Robert Benmosche remained encouraged, remarking that “continuing insurance operating results remain solid” and that “operating earnings at our continuing insurance operations have remained solid and stable.”

c) Southwest Airlines saw July traffic increase 3.4 percent. Loads (the percentage of seats filled on a plane) rose to a record high of 84.9 percent for the low-cost airline

d) Following yesterday’s poor July same-store sales and disappointing Q2 guidance, teen retailers Aeropostale and American Eagle were both downgraded to market perform at Wells Fargo.

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