Midday Market Update: Positive Economic Indicators Abound

September 2nd at 10:00am by Tom Lydon

U.S. stocks and exchange traded funds (ETFs) are fluctuating in morning trading as investors continued to remain concerned about unemployment. Other positive economic indicators blossomed, however. 

The ADP Employer Services Report indicated that the private sector shed 298,000 jobs in August, beating the 370,000 lost in July, but higher than the 250,000 anticipated by analysts.  Although it appears the numbers are trending in the right direction, the report also suggests that employment is likely to continue to decline for several months to come.

On the positive side, the Labor Department stated that productivity rose at an annual rate of 6.6% in the second quarter, marking the largest advance in six years.  This is of importance because worker productivity is the single biggest factor in determining living standards.  Higher productivity means that workers can increase or sustain their living standards, and it also illustrates that companies are able to boost wages financed by rising output, states Martin Crutsinger of the Associated Press.

Factory orders rose in July as companies tried to prevent stockpiles from declining further.  Bookings rose by 2.2%, the most since July 2007, fueled by stabilizing global markets and a rebound in the auto industry caused by the government’s “cash-for-clunkers” program.  In fact, automakers showed sales of cars and light cars at a rate of 14.1 million, the highest number since May 2008, states Courtney Schlisserman of Bloomberg.

In the pharmaceutical world, the world’s largest drug maker, Pfizer (PFE), indicated that it would pay a record $2.3 billion penalty over allegations that it had marketed the pain reliever Bextra and possibly other products for medical conditions different from their approved use.  This settlement is the largest ever paid by a drug company for alleged violations of federal drug rules.  The news sent the Pharmaceutical HOLDRs (PPH) down nearly 0.3% in morning trading. Pfizer is 14.3%.

BP PLC (BP), the biggest oil producer in the United States and biggest leaseholder in the Gulf of Mexico, found black gold.  BP said that it hit crude in its Tiber Prospect in the deepwater Gulf of Mexico and believes that it could be bigger than its Kaskida discovery, which has more than 3 billion barrels of oil in place.  The news sent the iShares S&P Global Energy (IXC) up nearly 1% in morning trading. BP PLC is 7.4%.

Crude oil has slipped for the third straight day to under $68/barrel. The decline in crude has been driven by cost-cutting measures by both corporations and individuals, as well as the greater than usual amount of oil in storage.  Despite the drop in oil, the United States Oil Fund (USO) is up 0.1% in morning trading.

Overall all three major U.S. indexes edged upward, with the Dow Jones Industrial Average adding 0.1%, the S&P 500 jumping 0.1% and the Nasdaq gaining 0.3%.

For more stories on energy, visit our energy category.

Kevin Grewal contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.