The PremiereTrade Market Wrap for 11/01/07

Consumers, battered by a steep downturn in housing and a severe credit crunch, slowed spending growth in September to the weakest performance in three months. Consumer spending rose by 0.3 percent in September, slightly lower than the 0.4 percent increase that analysts had been expecting.

First-time claims for state unemployment benefits dropped to their lowest level in three weeks during the week ending Oct. 27th, while the number of workers continuing to claim unemployment benefits rose to its highest level since Sept. 1st. Initial jobless claims fell to 327,000, a decrease of 6,000. It's the lowest since Oct. 6th.

The U.S. manufacturing sector grew at a slower pace for a fourth straight month in October. The ISM index fell to 50.9% from 52% in September. Economists expected a dip to 51.5%.

A soaring number of U.S. homeowners struggled to make mortgage payments in the third quarter, with properties in some stage of foreclosure more than doubling from the same time last year. Almost 447,000 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1 percent from the year before.

Chrysler LLC is laying off thousands of hourly workers in the Midwest as part of an effort to slash costs and match slowing demand for some vehicles. The company is cutting one shift each at three plants in Michigan, a plant in Illinois, and a plant in Ohio.

In Forex News Today

The dollar recovered from a record low against the euro after the Federal Reserve cut rates but dampened expectations of further monetary policy easing this year. The Fed said inflation risks were equal to the possibility of slower growth, prompting the fed futures market to cut bets on a December rate cut to as low as a 40 percent chance.

The yen rose against the euro and dollar as speculation increased that losses from subprime mortgage investments may deepen, spurring investors to cut riskier bets funded by loans in Japan.

The Canadian dollar has recently rallied to fresh multi-decade highs against the US dollar, with record crude oil costs stoking strong demand for the Canadian currency. With the world?s second-largest proven oil reserves, Canada has undoubtedly benefited from the commodity?s uptrend. Given the fact that it is the single-largest exporter of oil to the United States, it is little surprise that the US Dollar-Canadian dollar exchange rate has held a historically high correlation to the price of crude oil. However this correlation is deteriorating, indicating that US dollar weakness is becoming a bigger driver of USD/CAD than just oil prices. Therefore it remains to be seen whether $100 oil will drive USD/CAD below 90 cents.

Scheduled Economic Reports (Friday)

Non-Farm Payrolls (Oct), Unemployment Rate (Oct), Factory Orders (Sep)

In Earnings News

Exxon Mobil Corp. (XOM) posted a second straight drop in quarterly profit for the first time in five years after equipment and power failures slowed fuel output and refining margins narrowed. Third-quarter net income fell to $9.41 billion or $1.70 a share. The company was expected to earn $1.74 a share.

Credit Suisse Group (CS), Switzerland's second-largest bank, said it's ``too early to predict'' an end to the credit-market swings that caused $1.9 billion of write downs and the first profit decline in a year. Net income fell 31 percent to 1.3 billion Swiss francs ($1.1 billion), or 1.18 francs a share, in the third quarter.

Blockbuster (BBI) third-quarter net loss widened to $35 million or 20 cents a share, from a year-earlier loss of $24.7 million, or 15 cents a share. The video retail chain said revenue fell 5.7% to $1.24 billion, due to the closure and sale of 526 company-operated stores worldwide. On average, analysts expected a loss of 18 cents a share and revenue of $1.28 billion.

Scheduled Earnings Reports (Friday)

British Airways, International Paper, Chevron, Martha Stewart Living Omnimedia, Duke Energy, Viacom, Hearst Argyle Television, Readers Digest

Stocks in the News

Cisco Systems (CSCO) said it would almost double its investments in China over five years to develop at least two joint ventures in that country.

Prudential Financial (PRU) said third-quarter net income came in at $860 million, down 25% from a year earlier when the life insurance and retirement savings giant made $1.152 billion.

Cameron International (CAM) reported that third-quarter net income rose 69% on 21% higher revenue.