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Market Recap: Stocks Finish Flat Despite Glum Jobs Report


Not until smoke signals from WAMU and MBIA start, did the selling begin.

Stocks were surprisingly resilient for much of the day but finally succumbed to pressure originating from the financial sector. The Dow Industrials fell -16 points, or -0.135 to 12609, the S&P 500 edged +1 point or +0.08% to 1370, and the Nasdaq Composite closed +7 points, or +0.32% to 2370.

Investors got more hints of the direction of the economy this morning when the Bureau of Labor Statistics released the monthly Jobs report. For the month of March payrolls fell 80,000 vs. expectations of a decrease of 50,000. The unemployment rate increased to 5.1% vs. consensus estimates of 5.0%, the highest since September of 2005. Average hourly earnings grew 0.3% on a month-over-month basis and 3.6% on a year-over-year basis with both figures inline with economists' expectations, and the average hours worked per work week moved up slightly to 33.8 vs. expectations of 33.7.

Professor Mish Shedlock broke down the numbers and gave a pretty grim analysis. "51,000 construction jobs were lost. 48,000 manufacturing jobs were lost. 12,000 retail jobs were lost. 35,000 professional services jobs were lost. 18,000 government jobs were added. A whopping 93,000 goods producing jobs in total were lost (higher paying jobs), and even the lower paying service providing jobs such as those at Wal-Mart (WMT), Pizza Hut (YUM), Target (TGT), etc. provided a net gain of a mere 13,000 jobs.

"It should not be long now before even the service sector starts to contract. Wal-Mart has canceled many stores and so have other retailers. Consumers are shopping and eating out less. More layoffs are coming. No one should be denying that we are in a recession now." For more of Mish's thoughts, see Fed Uncertainty Principle.

Stock futures dipped after the announcement but major indexes quickly recovered and traded to session highs by midday. Not until smoke signals in the financial sector appeared, did stocks take a turn for the worse.

Toddo noticed a sign in Washington Mutual (WM). "We don't 'do' rumors in the 'Ville and in fact, I'm not even hearing one. But through the "you can learn a lot by watching" lens, something doesn't seem right with Washington Mutual the killer whale." WM plunged -12% to $10.17. Other notables include Wachovia (WB) -4% to $27.21. Morgan Stanley (MS) fell -2.6% to $47.60, and the broader Financial ETF (XLF) fell -1.35% to $26.36. Read Toddo's column, Outbreak! The Other Side of Anxiety.

The next shoe of the day was when Fitch downgraded MBIA's (MBI) financial strength to "AA" from "AAA" with outlook negative. According to Fitch said it didn't believe it would be possible for MBIA to significantly improve its credit profile until the company reestablished more momentum in the financial guaranty market. MBI settled -4.7% to $13.61. Read Professor Prieur du Plessis' column Credit Crunch: Is Worst Behind Us?

In tech, Riverbed (RVBD) made headlines. Shares of the company plunged after giving downside guidance for the first quarter. The company said earnings would be in the range of $0.08-0.10 per share vs. consensus estimates of $0.12. The stock hit a new 52 week low settling -12% to $12.86

Professor Fil Zucchi gave some hope to those bullish on Riverbed. "The 10% after-market drop may seem large in percentage terms, but actually seemed "well bid." I am still not convinced the valuation for RVBD is that attractive, but if I care to get involved it may be as attractive as it gets for a while….. In its release and conference call, RVBD already hinted at the Q2 guidance, so in yesterday's news we may have already seen one and a half shoes."

Coal stocks moved higher. The sector was lifted when Massey Energy (MEE) said it expected higher coal prices and was increasing spending to capitalize on the demand. MEE surged +18% to $47.15. Arch Coal (ACI) added +6.5% to $48.93. Peabody

In other commodities, crude oil gained +2.40 to 106.23. Gold added +4.0 to 909.00. Silver finished +0.305 to 17.785, and copper finished +5.45 to 397.85.

The dollar index fell -0.236 to 71.977.

For more Buzz insight, check out Minyanville's Buzz Bits.

Below is a recap of some of the idea flow on today's Buzz & Banter. Please note that stocks may appear in both bullish and bearish categories, due to long and short term trades by our many Minyanville professors.

Some bullish trade or investment ideas: RVBD, MA, FTI, VMW, QQQQ

Some bearish trade or investment ideas: DELL, AEM, WM, BIDU, AAPL

Have a great weekend, Minyans!
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