Jobless Claims were above the consensus and are thought to be disappointing which sent stocks down at the beginning of the day.
Highlights of the Report:
May and April employment reports were flat and disappointing which is the outlook for the June report as well based on month-to-date jobless claim data that are showing no improvement. Initial claims in the June 16 week came in at 387,000 which is 4,000 higher than the consensus. The prior week is revised 3,000 higher to 389,000. Convincingly underscoring the lack of improvement is the 4-week average which shows a fourth straight increase with a 3,500 gain to 386,250 (prior revised to 382,750). The June 16 week was the survey week for the monthly employment report and a comparison between it and the month-ago survey week shows a 15,000 increase. This is a reading that will depress forecasts for June employment data.
Another indication that the jobs market isn't improving is flattening in continuing claims which until April had been on a steep downtrend. Continuing claims in data for the June 9 week are unchanged at 3.299 million with the 4-week average up 5,000 to 3.294 million. The unemployment rate for insured employees, at 2.6 percent, has been steady at a recovery low for the last four months.
The May employment report released at the beginning of this month set the tone for what has been a flat series of economic reports. Now, weekly jobless claims data are pointing to trouble for the June employment report.
Today Moody's downgraded the top 15 banks in the US, Canada, and Europe. US Downgrades: Bank of America (NYSE:BAC) which went down one level from Baa2 to Baa1, Citigroup (NYSE:C) lowered two levels from A3 to Baa2, Goldman Sachs (NYSE:GS) down two levels to A1 from A3, JP Morgan Chase (NYSE:JPM) went from Aa3 to A2, and Morgan Stanley (NYSE:MS) fell from A2 to Baa1. All these banks are in an outlook that is not looking to help the company. This instant downgrading from Moody's kept the market falling with the worry of more downgrades from Moody's.
What Does This Show?
Now this occurrence is showing the true power that giant rating companies like Moody's have on what happens to the market. It shows how much people fear rating downgrades. And trust me when I say this, if all these banks had been upgraded the amount they had been downgraded, you would have seen the market rise 2% instead of fall 2%.