Before the Open (Jun 5)

Good morning. Happy Friday. Happy Employment Numbers Day.
The Asian/Pacific markets closed split, and very few indexes moved much. Hong Kong dropped; China rallied. Others were quiet. Europe is currently mostly down. Greece is down almost 5%; Austria is down more than 2%; Germany, France, Amsterdam, Stockholm, Switzerland, Finland, Italy, Belgium, Portugal, Sweden and Prague are down more than 1%. Futures here in the States point towards a moderate gap down open for the cash market.
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The dollar is up. Oil and copper are up. Gold and silver are down. Bonds are down.
The S&P moved from a 3-day high to a 3-week low. The Russell cleanly broke out and closed at its highest level since late-April, and then it moved back to the middle of its recent range.
The market’s underlying tone has been negative for a couple weeks. The small caps have been lagging, and numerous breadth indicators have suggested participation has not been broad based. These factors can be ignored in the very near term, but over time it would literally be impossible for the market to rally – especially the weak breadth numbers. Because of this my bias has been to the downside, and until the indicators strengthen, my bias will remain to the downside. Keep it simple. The market is not going to move up if the AD line, for example, is falling.
Here are the employment numbers…
unemployment rate: 5.5% (was 5.4% last month)
nonfarm payrolls: +280K (was +223K last month) –
private payrolls:
average workweek: unchanged at 34.5 hours
hourly wages: up $24.87 to $24.96
labor participation rate: up to 62.8% (was 62.7%)
April job gain trimmed from 223K to 221K.
March job gain raised from 85K to 119K.
Index futures quickly added to their losses after the news…but then recovered.
Bias remains to the downside. Key time is right now. The market is in danger of falling apart. More after the open.
Stock headlines from barchart.com…
DISH (DISH +4.86%) was downgraded to ‘Neutral’ from ‘Outperform’ at Macquarie.
Cardinal Health (CAH -0.47%) will acquire Harvard Drug Group for $1.115 billion.
Under Armour (UA -0.43%) was upgraded to ‘Buy’ from ‘Neutral’ at DA Davidson.
DreamWorks (DWA +0.55%) was upgraded to ‘Buy’ from ‘Hold’ at Stifel with a $34 price target.
Charles Schwab (SCHW -0.09%) was upgraded to ‘Buy’ from ‘Neutral’ at Goldman Sachs.
LifePoint (LPNT -1.05%) was initiated with a ‘Conviction Buy’ at Goldman Sachs with a price target of $92.
Team Health (TMH -0.20%) was downgraded to ‘Neutral’ from ‘Buy’ at Goldman Sachs.
Lockheed Martin (LMT -0.90%) was awarded a $920.35 million government contract for the manufacture and delivery of 94 F-35 Lightning II aircraft.
Thor Industries (THO -1.43%) reported Q3 EPS of $1.19, less than consensus of $1.21.
UTi Worldwide (UTIW -3.29%) reported a Q1 EPS loss of -35 cents, a much bigger loss than consensus of -15 cents.
Esterline (ESL -1.53%) reported Q2 adjusted EPS of $1.20, below consensus of $1.33.
Cooper Companies (COO -2.54%) reported Q2 adjusted EPS of $1.72, weaker than consensus of $1.76.
Verifone (PAY -1.49%) reported Q2 adjusted EPS of 44 cents, higher than consensus of 42 cents.
Gap (GPS +0.81%) reported that May same-store-sales were down 1% y/y.
Earnings and Economic Numbers from seekingalpha.com…
Today’s economic calendar:
8:30 Non-farm payrolls
12:30 PM Fed’s Williams speech
3:00 PM Consumer Credit
Notable earnings before today’s open: IXYS, LITB, YGE
Notable earnings after today’s close: none
Other…
today’s upgrades/downgrades from briefing.com
this week’s Earnings
this week’s Economic Numbers