Market briefing --- Bob (fast)
Rates --- Su (fast)
NYSE --- Deb (fast)
welcome to “world financial report,” i’m bob bowden. today’s jobs report exceeded even the most optimistic economic forecasts. companies added 288,000 workers to payrolls in april and the already-strong gains in march were revised up to 337,000. so far this year, job gains have averaged 217,000 a month, more than enough to absorb new entrants into the labor force. unemployment rate fell to 5.6%, falling for hispanics, blacks, women and men. and factories are hiring again with 21,000 jobs added in april.
>> this is an incredible number. all the people were waiting for job creation to happen. well, here it is, folks, here in spades and that manufacturing number, fantastic.
>> job gains may lead to higher labor costs. and may cause federal reserve policy makes to begin raising interest rates as soon as next month. pimco fund manager mcculley says the fed will probably pull the tightening trigger in august and keep going.
>> as americans turned away from the vietnam war, they may turn away from this one unless this issue is quickly resolved with full disclosure immediately with all due respect to investigations ongoing and panels appointed, the american people deserve immediate and full disclosure of all -- all -- that was the wrong sound bite, senator mccain. meanwhile, bonds reflected the new fear of the fed asked 10-year with its yield to the highest since 2002, the yield up to 4.77%. on the shorter end, the two-year note down 15/32 -- the latest jobs report has many wall street economists scrambling to revise their forecasts on interest rates. morgan stanley’s chief economist steven roche says the fed is so far behind the curve it’s not even funny. 30% of the 100 economists surveyed by bloomberg now expect the federal reserve to start raising rates as early as next month. bloomberg’s su keenan joins me with more on that story.
>> up until now, bob, as you know, the question has been when the federal reserve would raise rates. today’s job report painting a picture of of a stronger-than-expected labor market , and five of the 24 primary dealers expect an interest rate hike in june. j.p. morgan, nomura securities, bank of america and morgan stanley are among the wall street firms expecting the central bank to raise the rate a quarter point at the june meeting. today’s jobs report has every economist racing to change their forecasts. according to one economist, the improving jobs picture forces the fed’s hand.
>> the fed is looking directly at the labor markets and we’ve said that what they did would depend on how how many jobs were created and we’re running well above the pace that we thought we were going to so in light of what happened with the job market on friday and in light of all the other good numbers we’ve gotten, the fed will certainly move in june.
>> boberski’s new forecast matches that of j.p. morgan that the fed will raise the rate to 2% by the end of the year with 1/4 point increases at june, august, november and december. j.p. morgan’s long-term prediction is for interest rates to reach 4% by the end of next year. bear stearns’ chief global economist also sees a rate increase in june and predicts the fed will raise the rate to 1.75% by year’s end. merrill lynch expects the fed to raise rates in august after previously predicting they would wait a full year. abn amro and credit suisse first boston also expect the fed to make its first rate adjustment in august.
>> thank you.% moving on, evidence for the bush administration that the president’s policies are working.
>> i think, mike, the important point here is that we have overcome an extraordinarily amount of adversity and have this economy on a good path and a path that is creating jobs.
>> payroll gains are chipping away at the number of jobs lost during president bush’s term. democratic presidential challenger, john kerry, blamed bush for the 1 .5 million jobs lost during his administration% -and says there is still a long way to go to get america going again. bush countered the tax cuts he won last year have helped spur the economy to its fastest growth in 20 years, promoting payroll growth. democrats in congress welcomed the job gains but insisted there is more to recovery.
>> don’t spike the ball on the 50-yard line. there’s healthcare costs, retirement costs, household income going down the last three years and people seeing inflation. this is a number that’s important but g.d.p. growth won’t also impact―will have an impact but won’t by itself change people’s attitudes about whether we’re going in the right direction or wrong direction.
>> last week, bush’s approval rating dropped to a new low in a gallup statistical poll. and checking the numbers in the equities numbers with the dow down 1.2%. deborah kostroun is at the new york stock exchange with a report on stocks.
>> triple-digit losses in the dow jones industrial average and all of that on this recovery in the job market , now two months in a row and that could lead to higher interest rates, really good news for jobs but bad news according to market analyst with jeffreys and company as this will likely push the fed to raise rates in june rather than august. semis and techs still coming out as good performers today, the only two on the plus side and many of the interest-rate-sensitive stocks, utilities, homebuilders and gold sharply lower as the dollar up. the financials sharply lower and the s&p financial index, all 24 components of that closing lower. we saw all of this concern about rising interest rates and what that could mean not only to banks but also many of the mortgage lenders sharply lower like washington mutual, fannie mae, freddie mac, all sharply lower. gold stocks sharply lower and many of the gold stocks coming in. this is a one-year chart of the gold and in today’s session we saw a lot of 52-week lows in the gold as the dollar increasing against the euro. in addition to gold, we saw material stocks lower. material stocks, a lot of concern that the rise in interest rates could impact consumer spending, things like cars and appliances and so material stocks among some of the worst performers. interest rate sensitive stocks like homebuilders sharply lower but semiconductors one of the best performers in the s&p today.
>> thank you. crude oil futures on friday touched $40 a barrel for the first time in 13 years. that was back when iraq invaded kuwait when we last saw $40 for crude. global fuel demand is up as unrest in saudi arabia and iraq threatens infrastructure. marshall steeves, oil analyst with refco, expects prices to stay high for a while.
>> i think that if and when we get through $40 which i fully expect if not again today, perhaps next week, i don’t see prices coming off significantly until this security issue or terrorist threat can be dealt with in a serious way so that means we’ll probably look at fairly high oil prices for some time to come.
>> and the gasoline trend has been clear. new york gasoline futures closed at a record high for the ninth day in 10. when we come back, donald hodges runs hodges capital management and says some energy stocks will reap the benefits of higher oil prices. we’ll have that interview coming up.
