Morning Update

Bull's Labor Pains Wane

Stocks have jumped well above the unchanged mark in morning action, following the November labor report, which showed a sharp deceleration in the pace of job losses, surprising the consensus forecast of economists. The unemployment rate also unexpectedly fell, to add to the upbeat backdrop, suggesting the employment market may be lending a hand to the economic recovery sooner than some had anticipated. Treasuries moved solidly lower following the report and the European markets reversed early losses and are in positive territory. In equity news, Take-Two Interactive Software warned that weak game sales will impact its performance, Bank of America announced that it has raised over $19 billion, while FedEx increased other shipping rates. In other overseas action, Asia finished mixed.

As of 8:54 a.m. ET, the December S&P 500 Index Globex future is 13 points above fair value, the DJIA is 108 points above fair value, while the Nasdaq 100 Index is 18 points above fair value. Crude oil is higher by $0.10 at $76.56 per barrel, and the Bloomberg gold spot price is down $16.73 at $1,190.88 per ounce. Elsewhere, the Dollar Index-a comparison of the US dollar to six major world currencies-is up 0.6% at 75.05.

Take-Two Interactive Software (TTWO $11) is down sharply after the video game producer issued preliminary 4Q results and full-year results, where it said both figures will be below its prior guidance. TTWO said several factors contributed to the lowered outlook, with the largest being the performance of its Major League Baseball titles, inventory write-downs, and realized lower- than-expected initial performance of several of its key holiday releases. TTWO now expects 4Q revenue to be between $325-350 million and EPS in a range of $0.05-0.10, compared to the expectation of Wall Street analysts, which are calling for the company to post revenue of $370 million and earnings of $0.33 per share. For the full year, TTWO forecasts revenue of between $950-975 million, and a loss for the period of between $1.10-1.15, compared to the Street's expectations of $995 million in revenue and a loss of $0.84 per share. Also, the company issued a 1Q loss forecast that was larger than analysts had expected, and loss for 2010, while the Street had expected TTWO to post earnings for the year.

As part of its plan to pay back the entire $45 billion in taxpayer funds that its received from the Treasury's Troubled Asset Relief Program (TARP), Dow member Bank of America (BAC $16 ¹) announced that it has raised $19.3 billion in common equivalent securities.

FedEx (FDX $86) reported late Thursday that it would increase its ground and home delivery shipping rates by an average of 4.9%, effective January 4, 2010. The package delivery company previously announced that it would increase rates for its express deliveries by an average of 5.9% for US domestic and export services also effective on the same date.

Labor report shows much fewer jobs were shed from nonfarm payrolls than expected

Nonfarm payrolls fell by 11,000 jobs in November, much fewer than the Bloomberg estimate that called for a 125,000 decline. Also, October was favorably revised to -111,000 from -190,000, and September was positively revised from -219,000, to -139,000. The unemployment rate fell from 10.2% to 10.0%, compared to the consensus forecast, which called for the rate to remain unchanged. Average hourly earnings rose 0.1%, versus the Street's forecast of 0.2%. Treasuries moved lower after the report.

Later this morning, the economic calendar will yield a key report on factory orders for October, forecast to come in flat, after gaining 0.9% in September.

US Jobs data helps Europe overcome early pressure

Stocks in Europe have turned higher in afternoon action on the heels of the favorable US labor data, overcoming early pressures that stemmed from yesterday's late-day slide on Wall Street on uneasiness ahead of the jobs release and after a report that showed service sector activity unexpectedly fell to a level depicting contraction. However, financials are lower across the pond to limit the advance, as Royal Bank of Scotland (RBS $11) and Lloyds Banking Group (LYG $5) are both under solid pressure to lead a broad-based decline in the sector, exacerbated by a report from the UK National Audit Office that predicted the two banks could come up short of their targets for lending to businesses. In other equity news in Europe, shares of the world's number-two temporary staffing firm, Randstad Holding (RANJY $22), are nicely higher after issuing a favorable revenue outlook and saying US staffing had returned to growth for the first time in three years. Additionally, Ireland's largest homebuilder, Abbey, is sharply higher after saying it expects "modest profitability" this year after swinging to a profit for the first six months of the fiscal year.

Asia mixed following yesterday's slide in the US

Stocks in Asia were mixed, with markets in China and Australia posting movements at the opposite end of the spectrum, with the Shanghai Composite Index gaining 1.6%, while the S&P/ASX 200 Index fell 1.5%. Traders treaded cautiously following Thursday's late-day slide on Wall Street and ahead today's US jobs data, which added to the uncertain sentiment in Asia. Japan's Nikkei 225 Index finished 0.5% higher in choppy trading as the yen dipped in and out of positive territory versus the dollar, while Hong Kong's Hang Seng Index declined 0.3%. Meanwhile, South Korea's Kospi Index increased 0.6% after a favorably revision to the nation's 3Q GDP, which showed a 3.2% quarter-over-quarter increase, compared to the previous report of a 2.9% increase. In equity news, Korean Air Lines, South Korea's largest air carrier, gained solid ground to help the Kospi's advance, aided by its announcement that it will order five of Dow member Boeing's (BA $54 1) 747-8 passenger jets worth about $1.5 billion in list prices. After today's closing bell, Toyota Motor Corp. (TM $85) warned that it may not be able to achieve a "linear" earnings recovery into next year as it previously hoped, due to rally in the yen versus the dollar and the fragile state of the US economy.