U.S. stocks and exchange traded funds (ETFs) are in positive territory on uplifting economic news about jobs and more.
The Labor Department reported that employers slashed 539,000 jobs in April, the fewest in the last six months and much better than what economists were thinking. Although this is an indicator that things may be turning around for our economy, the job market is still bleak. Unemployment is at 8.9%, companies are cutting workers hours and we are in the longest recession since World War II. To really put it in perspective, employers have handed out 13.7 million pink slips since the start of the recession.
On a different note, the Commerce Department reported that wholesale inventories dropped by 1.6% in March, much higher than the 1% expected by economists. Wholesale inventories are goods held by distributors who generally buy from manufacturers and sell to retailers. So, what this means is that the retail sector is still struggling, which is supportive the 2.4% plunge that wholesalers saw in sales for March, states Martin Crutsinger of the Associated Press.
It is official, the results of the government’s stress test have been released and 10 of the 19 banks tested need to raise a total of $75 billion in capital. Of these 10 banks, Bank of America (BAC) needs to raise $33.9 billion, Wells Fargo (WFC) is at $13.7 billion, GMAC (GJM) is at $11.5 billion, Citicorp (C) is at $5.5 billion and Morgan Stanley (MS) is at $1.8 billion.
Of the banks that passed the stress tests, JP Morgan (JPM) and Goldman Sachs (GS) didn’t need to raise additional capital, state Daniel Wegner and Jeannine Aversa of the Associated Press. This is good news in that it lifted any speculation and worries of uncertainty off of the financial sector. The Financial Select SPDR (XLF) jumped 2% in intraday trading and is down 3.2% year-to-date.
Treasury Secretary Timothy Geithner believes that the United States could prevent having a lost decade, similar to what was seen in Japan in the 1990s, through earnings and having the banking system earn its way out of trouble. So far, the plan has worked; after all, the financial sector has shown a strong performance over the last month.
The Dow Jones Industrial Average jumped 1% , the Nasdaq gained about 0.5% and the S&P 500 added nearly 1% in morning trading.
Kevin Grewal contributed to this article.
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