A.M. Market Call: Attention Turns to Unemployment Report
JASON CARROLL, CNN ANCHOR: Some encouraging news coming to us out of New York: The markets did a little better yesterday. Let's turn it over to Deborah Marchini to see what she's got cooking for us right now -- good morning, Deborah.</s>DEBORAH MARCHINI, CNN ANCHOR: Oh, yes, but can it last? That's the question on investors' minds this morning, with S&P; futures about seven points below breakeven, and Nasdaq futures sinking steadily. So it's to be expected after a nine point rally in the Nasdaq market yesterday. Amanda Lang is here with her "A.M. Market Call," taking another look at what investors will be watching for this morning -- hi.</s>AMANDA LANG, CNN CORRESPONDENT: Hi, Deb. Certainly, attention will be focused on this employment report. And investors will be watching, because they are curious to know whether or not this number is going to give an indication as to whether the Fed will move to cut rates before the May meeting. If the indication is that the number is weak enough -- what's bad for Main Street is good for Wall Street -- then it means that the Fed could offer up an intermeeting cut. And we may well see the stock market rally. Now, there's an interesting report. "Business Week" is saying that the Conference Board's Help-Wanted Ad Index is off 20 points since last year to 71. That's the lowest level since 1993. But more importantly, the rate of decline, it's down 22 percent. And since the '70s, anytime that Help-Wanted Index has fallen more than 15 percent, it has led to a recession. So that's a very interesting sign of weakness. Now, corporate America certainly has a hiring freeze on. And one Fed governor speaking yesterday said that the Fed is alert to any signs of weakness in stocks, exchange rates or consumer confidence that would either indicate inflation or weaker economic growth. Now, you'll note employment is not listed among the things that the Fed is watching. But that consumer confidence number is the key. Consumer confidence is still a number that the Fed is paying very close attention to. Employment figures, as we have been discussing all morning, is a lagging indicator. In other words, it's behind the economic slowdown. We may well see unemployment, according to some economists, above 5 percent sometime next year. More importantly, college-educated unemployment, which at the moment is about 1.6 percent, could actually hit 2 to 3 percent, levels seen just post the last recession. That will hit consumer spending, because, of course, college- educated folk have disposable income. It's a big part of the GDP. Finally, it's a Friday. Fridays tend to be choppy this year. We are heading into the beginning of the first-quarter earnings season, when we'll start to hear from companies, and, more importantly, hear about what they expect next quarter. Next week is not a very heavy week, but we do have Motorola, General Electric and Yahoo!. Those are three fairly closely-watched companies. And they'll likely have some kind of influence on the market next week. We could see investors reluctant to go home long as they have been. They like to sell out of their positions on Friday.</s>MARCHINI: Yes, we'll watch. Thanks, Amanda.