Investors wait for key US jobs report
INVESTORS largely took a wait-and-see approach yesterday as US stocks ended little changed ahead of today’s key employment report, but tech shares rose after strong earnings from chipmaker Qualcomm.
Recent economic data suggesting the economy is on a slow but steady path to recovery has helped fuel a rally in stocks.
Today’s nonfarm payrolls report, which is expected to show the improving labour market trend remained intact in January, will be a key test of the rally.
The optimism over the labour market was reinforced as new claims for jobless benefits dropped more than expected in the latest week, according to data released yesterday.
“A decent number, and I would expect equities to continue their advance, a not decent number and we’ll have a correction. It’s that simple,” said Frank Lesh, a futures analyst and broker at FuturePath Trading in Chicago.
US employment growth probably slowed in January as temporary workers hired during the busy holiday shopping season were laid off, but the underlying picture is expected to remain relatively positive, say economists.”
Nonfarm payrolls likely rose by 150,000 after increasing 200,000 in December, according to a Reuters survey. The unemployment rate is seen holding steady at a near three-year low of 8.5 per cent.
Technology shares outperformed the broader market. Qualcomm hit its highest level in 12 years after first-quarter profit trounced estimates. Its shares gained two per cent to $60.73 after hitting a high of $61.95.
The Dow Jones industrial average dropped 11.05 points, or 0.09 per cent, to 12,705.41. The Standard & Poor’s 500 Index gained 1.45 points, or 0.11 per cent, to 1,325.54. The Nasdaq Composite Index rose 11.41 points, or 0.40 per cent, to 2,859.68.
MasterCard rose 6.7 per cent to $381.57 after the payment processor beat analysts’ estimates for the seventh straight quarter.
Healthcare shares were among the losers. Drugmaker Merck & Co, the number two US drugmaker, said profit would be little changed in 2012. The shares fell 0.5 per cent to $38.44.
Insurer Cigna posted a lower-than-expected fourth-quarter profit, hurt by performance in its disability and life coverage business and international plans.
Cigna also forecast 2012 earnings below Wall Street’s target, sending shares down 3.4 per cent to $44.13.