Morning Market Update

Modestly Lower Following a Rise in Jobless Claims

After posting strong gains for a second-consecutive session yesterday, US stocks are modestly lower in early trading following a report that showed jobless claims came in above expectations and amid some cautious action ahead of tomorrow’s speech in Jackson Hole, Wyoming by Fed Chairman Bernanke. Meanwhile, the Nasdaq Composite is under some pressure on the announcement that Steve Jobs resigned as Apple Inc’s CEO and as Applied Materials Inc offered a lackluster outlook. Treasuries are moving higher following the jobless claims data, which is the lone economic report on today’s docket, while gold prices remain under pressure. Overseas, Asian stocks moved nicely higher on the heels of the favorable durable goods orders data yesterday in the US, while Europe is making a bid for a fourth-straight winning session on strength in financials.

As of 8:48 a.m. ET, the September S&P 500 Index Globex future is 2 points below fair value, the Nasdaq 100 Index is 13 points below fair value, and the DJIA is 14 points below fair value. WTI crude oil is $0.41 higher at $85.57 per barrel, and the Bloomberg gold spot price is down $26.52 at $1,732.60 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—is flat at 74.02.

Apple Inc. (AAPL $376) is lower after the company’s Board of Directors announced that Steve Jobs has resigned as Chief Executive Officer, and Tim Cook, AAPL’s previous Chief Operating Officer, will be the company’s new CEO. Jobs will remain as AAPL’s Chairman of the Board. The company added that, “The Board has complete confidence that Tim is the right person to be our next CEO.” In a letter to AAPL’s Board, Jobs said, “I could no longer meet my duties and expectations as Apple’s CEO,” while recommending that Tim Cook be named as CEO. Jobs added that he believes “Apple’s brightest and most innovative days are ahead of it.”

Elsewhere, Applied Materials Inc. (AMAT $11) is under some pressure after the semiconductor equipment maker offered disappointing fiscal 4Q guidance and lowered its outlook for chip equipment spending for the year. AMAT said customers already started to pull back a little bit on spending and the global economic situation worsened, further impacting its customers’ spending plans, per Dow Jones Newswires. AMAT added that “softness should continue for at least a couple more quarters,” hurt by weakness in PC sales. The outlook by the company is more than offsetting its fiscal 3Q earnings report, in which it posted EPS ex-items of $0.35, two cents above the consensus estimate of analysts surveyed by Reuters, with revenues of $2.8 billion, exceeding the Street’s forecast of $2.7 billion.

Jobless claims rise

Weekly initial jobless claims rose by 5,000 to 417,000, versus last week's figure which was upwardly revised by 4,000 to 412,000, and compared to the 405,000 level that economists surveyed by Bloomberg had expected. Also, the four-week moving average, considered a smoother look at the trend in claims, increased by 4,000 to 407,500, while continuing claims dropped by 80,000 to 3,641,000, below the forecast of economists, which called for continuing claims to come in at 3,700,000. The Labor Department noted that the labor dispute at Dow member Verizon Communications Inc. (VZ $36) had boosted jobless claims for a second-straight week.

Treasuries are higher in early action following the data, with the yield on the 2-year note down 2 bps to 0.20%, the yield on the 10-year note 3 bps lower to 2.27%, and the 30-year bond rate declining 1 bp to 3.64%.

Europe making a charge for four in a row

The equity markets in Europe are higher in afternoon action, with financials leading the way, helping stocks make a bid for the fourth-consecutive winning session. Banking stocks are finding support from a sharp increase in shares of Credit Agricole (CRARY $4) after France’s second-largest bank by assets, according to Bloomberg, reported a smaller-than-anticipated drop in profits. Moreover, shares of Barclays Plc. (BCS $10) are also rising sharply after the company’s CEO told CNBC that Britain’s second-largest bank by assets, per Bloomberg, does not need to raise additional capital. Meanwhile, shares of alcoholic beverage maker Diageo (DEO $74) are contributing to the advance across the pond, rising solidly after posting favorable full-year earnings. However, the UK equity markets are lagging behind as some weakness in health care and telecommunications stocks are partially offsetting the strength in financials.

Elsewhere, on the European economic front, UK consumer confidence declined by a smaller-than-forecasted amount and German consumer sentiment came in stronger than estimated, while a read on UK sales deteriorated by a larger figure than was expected.

The UK FTSE 100 Index is nearly unchanged, France’s CAC-40 Index is 0.9% higher, and Germany’s DAX Index is gaining 0.4%.

Asia nicely higher following another strong advance in the US

Stocks in Asia finished mostly higher, with the major markets in the region being boosted by the second-straight session of solid gains in the US yesterday on the heels of a better-than-expected durable goods orders report, which was led by an 11.5% rise in motor vehicles and parts. Japan’s Nikkei 225 Index gained 1.5%, with automakers pacing the advance, while export issues got some relief from some softness in the yen, which had posted a post World War II record high last week. Meanwhile, Australia’s S&P/ASX 200 Index finished 1.1% higher as US recession concerns eased somewhat, while shares of BHP Billiton (BHP $81) moved nicely higher to aid the upward move, after the world’s largest mining company, per Bloomberg, posted record second-half earnings yesterday.

However, Chinese stocks led the way, with the Shanghai Composite Index rising 2.9% and the Hong Kong Hang Seng Index gaining 1.5%. Some upbeat corporate earnings reports helped buoy the Chinese equity markets, with shares of China Unicom (CHU $19) rising sharply and China National Offshore Oil Corp. (CEO $187), or CNOOC, gaining solid ground after both companies posted better-than-expected first-half profits. Finally, South Korea’s Kospi Index rose 0.6%, supported by a solid increase in shares of Samsung Electronics Co. (SSNLF $800) on the heels of the resignation of Steve Jobs from competitor Apple Inc and despite an unfavorable patent ruling between the two companies that will block Samsung from selling several smartphone models in parts of Europe.