Despite weaker-than-expected job numbers, stocks and exchange traded funds (ETFs) are in slightly positive territory this morning as Wall Street sorts everything out.
The Labor Department reported the number of individuals filing new unemployment claims jumped to 637,000, much higher than economists expected. This increase sent the total number of unemployment recipients up to nearly 6.56 million, yet another consecutive record. This indicates that employers are still not hiring, and any sign that an economic recovery is in place just got weaker.
On a separate note, wholesale inflation numbers jumped more than expected in April. Wholesale prices climbed 0.3% last month, higher than the 0.1% expected by analysts, states Stephen Bernard of the Associated Press. Wholesale inflation gives one an idea of how prices have increased for producers of products, in other words, it is measured by PPI, or the Producer Price Index.
The PPI includes intermediate goods and fuel and energy prices, two pieces that are not included in the CPI, or Consumer Price Index, which is a measure of average prices for consumer goods and services purchased by a typical household.
Shifting our attention over to earnings reports, the world’s largest retailer, Wal-Mart (WMT), reported flat earnings for the first quarter of 2009. This indicates that Wal-Mart expects to hold on to many of the customers that transitioned to discount retailers as a result of the weak economy. On a positive note, Wal-Mart indicates that some of these customers have started to purchase discretionary items, an indicator that some believe a sunnier disposition for the economy is to come. On the other hand, this time last year, many Wal-Mart shoppers were spending their stimulus checks, extra cash that won’t be available this year. As for the remainder of the year, the recession could continue to hurt Wal-Mart, when it comes to foreign currency exchange rates and the strength of the dollar. Wal-Mart reported first quarter earnings of $0.77/share and met Wall Street’s expectations.
An ETF that was impacted by the aforementioned news is the Consumer Staples Select SPDR (XLP), gaining nearly 1% in intraday trading, despite being down nearly 5% for the year; WMT is 12.5%.
Another indicator that the economy may be far from a recovery came from black gold. The volatile commodity fell below $57/barrel in intraday trading on the New York Mercantile Exchange. One reason crude oil declined was a report that indicated the world’s petroleum appetite will shrink even more than expected this year. This sent United States Oil (USO) is down 1% in morning trading.
The Dow Jones Industrial Average added nearly 0.5%, the S&P 500 gained about 1% and the Nasdaq was up nearly 1.3% in morning trading.
Kevin Grewal contributed to this article.