Friday, August 06, 2004


Employment figures rock markets.

The damage done at open by July's employment reports continued to impact financial markets throughout the day. The NASDAQ, Dow and S&P 500 all posted 2004 lows with the Dow losing 147.70 points. On the other hand, bond markets posted huge single day gains, with the yields of the 10 year bond shedding 21 basis points, one of the largest gains of the year. Mortgage rates are loosely tied to the 10 year bond.

Coupled with increased oil prices, these soft employment numbers should signal the Fed to hold off on raising its overnight lending rate on Tuesday. However, many economists think the Fed will continue its long term tightening plan and bump rates .25 of a point on Tuesday. Some analysts think the current combination of economic trends will create some very rough times ahead.

The next big economic news will come Tuesday when the Fed meets for its Federal Open Market Committee.

An interesting side note in today's dealings when MCI, formerly WorldCom, shares jumped 16% after a smaller than expected 2nd quarter loss. Additionally, it announced a quarterly dividend of $.40 per share. Call me crazy here, but if I were a WorldCom creditor, I would be very upset about this. WorldCom declares bankruptcy, changes its name back to MCI, gets back in business, posts losses and rewards its stockholders (chiefly, its own management) with dividends. Something is not quite right here.

This report sponsored by the National College of Business & Technology.

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