Market Analysis

The major U.S. index futures are pointing to a slightly higher opening on Friday, with sentiment firming up after the release of a mixed job report. The government report showed that the economy added lesser jobs than had been anticipated. However, with the revisions to the previous two months’ numbers, job growth has been largely in line. The unemployment rate edged down slightly compared with expectations for an unchanged rate. Crude oil is trading notably lower and risk currencies are weaker too. The mixed report could fail to give a direction and result in lackluster trading.

Despite the release of a positive jobless claims report, apprehensions about the non-farm payrolls report kept sentiment subdued for much of Thursday’s session.

The major U.S. averages opened on a nervous note and moved below broadly sideways below the unchanged line until the afternoon. After declining sharply in the afternoon, the indexes moved sideways yet again before paring some of their losses in late trading. The Dow Industrials ended down 61.98 points or 0.47 percent at 13,207 and the S&P 500 Index closed 10.74 points or 0.77 percent lower at 1,392, while the Nasdaq Composite Index ended at 3,024, down 35.55 points or 1.16 percent.

Twenty-three of the thirty Dow components closed lower, with Hewlett-Packard (HPQ) leading the declines with a 3.05 percent drop. Alcoa (AA), Bank of America (BAC), Caterpillar (CAT), Chevron (CVX) and Intel (INTC) also declined sharply.

Semiconductor, transportation, biotechnology, resource, financial and retail stocks were among the worst performers of the session.

On the economic front, the results of the Institute for Supply Management’s survey showed that service sector activity expanded at a slower rate in April. The non-manufacturing index fell 2.5 points to 53.5 in April. The business activity index and the new orders index fell 4.3 points and 5.3 points, respectively to 54.6 and 53.5. Meanwhile, the backlog orders index rose 3.5 points to 53. The employment index also fell, dropping
2.5 points to 54.2.

Non-farm business sector labor productivity fell at an annual rate of 0.5 percent in the first quarter, according to a report released by the Labor Department. This marked the first drop in a year and came about due to a 3.2 percent increase in hours. Unit labor costs rose at a 2 percent annual rate.

Currency, Commodity Markets

Crude oil futures are trading down $1.57 at $102.66 a barrel after declining $2.68 to $ 102.54 a barrel on Thursday. Gold futures are currently adding $4.10 to $1,638.90 an ounce. In the previous session, gold fell $19.20 to $1,634.80.

The U.S. dollar is trading at 80.19 yen compared to the 80.18 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.3146 compared to yesterday’s $1.3153.

Asia

Most Asian markets closed lower amid apprehension concerning the U.S. non-farm payrolls reports. A labor market recovery is considered the central theme to the ongoing economic recovery in the world’s largest economy. The Japanese market remained closed on account of a public holiday.

Australia’s All Ordinaries closed down 35.10 points or 0.78 percent at 4,459, while Hong Kong’s Hang Seng Index receded 163.53 points or 0.77 percent before closing at 21,086. The Chinese market ended 0.49 percent higher.

A survey by HSBC and Markit Economics showed that the Chinese service sector expanded at a faster rate in April. The HSBC business activity index rose 0.9 points to 54.1 in April.

Europe

European stocks are trading with moderate losses ahead of the release of the U.S. jobs data.

In corporate news, Lafarge reported a wider loss for its first quarter, weighed down by restructuring charges. Sales rose 5 percent. French banking giant BNP Paribas reported a 9.6 percent increase in its first quarter profits, thanks to a capital gain related to a stake sale. However, excluding the gain, the profit was sharply lower than the year-ago period.

German industrial gas maker Linde reported higher profits for its first quarter, while Air France-KLM reported a wider loss for its first quarter.

Final estimates released by Markit Economics showed that private sector activity in the eurozone contracted by more than initially estimated in April. The composite output index fell to 46.7 in April from 49.1 in March.

A report released by Eurostat showed that eurozone retail sales rose 0.3 percent month-over-month in March following a 0.2 percent drop in February. Economists had expected an unchanged reading for the month.

U.S. Economic Reports

The U.S. economy added 115,000 jobs in April, according to a report released by the Labor Department. Economists had expected non-farm payrolls to increase by 165,000. Meanwhile, the previous month’s job gains were upwardly revised to 154,000 from the 120,000 reported earlier. The February job additions were also revised to 259,000 from 240,000.



The unemployment rate based on the household survey ticked down 0.1 points to 8.1 percent. The labor force participation rate declined to 63.6 percent, while the employment population rate was little changed at 58.4 percent. The average hourly earnings for all employees rose by 1 cent to $23.38, while on a year-over-year basis, average hourly earnings rose by 1.8 percent.



Employment in professional and business services rose by 62,000 and retail trade employment climbed by 29,000. Additionally, the healthcare sector added 19,000 jobs and the manufacturing sector added 489,000 jobs. The transportation and warehousing sector lost 17,000 jobs.

Stocks in Focus

AIG (AIG) reported first quarter adjusted earnings of $1.65 per share, ahead of the $1.12 per share consensus estimate.

LinkedIn (LNKD) said its first quarter adjusted earnings more than doubled to 15 cents per share, while its revenues nearly doubled to $188.5 billion. The company’s second quarter revenue guidance was above estimates, while it raised its 2012 revenue guidance. The company also announced a deal to buy professional content sharing community SlideShare for $118.8 million.

Consolidated Edison (ED) reported ongoing earnings of $1.01 per share for the first quarter compared to 99 cents per share in the year-ago period. The earnings were below estimates. The company confirmed its 2012 earnings guidance, which surrounded the consensus estimate.

SunPower (SPWR) reported a first quarter non-GAAP loss of 12 cents per share compared to earnings of 15 cents per share in the year-ago period. Revenues rose to $494.1 million from $451.4 million last year. The company reaffirmed its 2012 non-GAAP revenue guidance of $2.6 billion to $3 billion, while for the second quarter, it expects revenues of $575 million to $650 million.

Kraft Foods (KFT) reported first quarter operating earnings of 57 cents per share, while net revenues grew 4.1 percent to $13.1 billion. The results were better than expected. The company expects 2012 net revenue growth of 5 percent and operating earnings per share growth of 9 percent.

Digital River (DRIV) reported first quarter non-GAAP earnings of 30 cents per share on revenues of $102.44 million. For the second quarter, the company expects non-GAAP earnings of 17-19 cents per share on revenues of $92 million to $94 million.

Fluor’s (FLR) reported first quarter earnings of 91 cents per share on revenues of $6.3 billion. The earnings were ahead of estimates, while revenues were in line The company also reaffirmed its 2012 earnings per share guidance of $3.40-$3.80, which surrounds the consensus estimate of $3.75 per share.

Public Storage (PSA) reported first quarter funds from operations of $1.35 per share, lower than the $1.48 per share reported for the year-ago period. On an adjusted basis, the FFO was $1.44 per share compared to the year-ago quarter’s $1.28 per share. Revenues rose to $442.62 million. The results exceeded estimates.

Manitowoc (MTW) reported first quarter non-GAAP earnings from continuing operations of 1 cents per share compared to an adjusted loss of 10 cents per share last year. Sales were up 17.5 percent to $860.1 million. The results missed estimates.

J.C. Penney (JCP) announced the appointment of Ken Hannah as its CFO, effective May 7th.

Mohawk Industries (MHK) reported first quarter earnings that beat estimates, while its revenues were slightly shy of estimates. The company’s second quarter adjusted earnings per share guidance surrounded the consensus estimate.