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MARKET WRAP – SELLING THE NEWS

As we expected, stocks cratered this afternoon as investors look beyond the Fed news to the jobless report on Friday.  Investors are paring back risk in case the jobs report disappoints once again.  The job market remains one of the primary concerns about the recovery.  The S&P 500 finished the day roughly flat.   Banks finished down 1.5% and the S&P erased a full 1.5% rally.

U.S. Economy
The Federal Reserve concluded its two-day meeting and kept the federal funds rate unchanged at .125%, as expected. They acknowledged that “economy has continued to pick up,” but continue “to anticipate that economic conditions… are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” The December 2010 eurodollars were up .03 at 98.44.

The Institute of Supply Management’s index of services slipped from 50.9 to 50.6 in October, weaker than expected, but still a sign of expansion.

The Mortgage Bankers Association said that its index of mortgage applications was up 8% last week, helped by a 30-year fixed mortgage rate of 4.97%.

ADP Employer Services said that 203,000 private sector jobs were lost in October, down from a loss of 227,000 jobs in September. The U.S. Labor Department will release its next unemployment report on Friday morning.

Grains and Cotton
December corn started the day higher, but closed down 6 cents at $3.84, blamed on profit-taking and better harvest weather this week.

Livestock
December cattle closed up .55 at 86.25, helped by the weak U.S. dollar and gradually improving economic news.

Energies
The U.S. Department of Energy (DOE) said that crude oil supplies were down 4.0 million barrels last week due to lower imports. Supplies of gasoline were down 300,000 barrels while heating oil supplies were down 1.1 million barrels. December crude oil was up .80 at $80.40.

The DOE also said that refinery use fell from 81.8% to 80.6% last week. Over the past four weeks, gasoline demand was unchanged from a year ago and distillate demand was down 14.8% from a year ago. December reformulated gasoline gained 1.23 cents to $2.0127.

Metals
The World Bank said that they expect real GDP in China to be up 8.4% in 2009 and up 8.7% in 2010, both improvements from their earlier forecast. December copper closed up 3.70 cents at $2.9930.

December gold closed up $2.40 at another new high of $1,087.30 while the U.S. dollar dropped lower.

Currencies
An index of services in the U.K. increased from 55.3 to 56.9 in October, the highest in over two years. The December British pound finished up 1.91 cents at $1.6589.

Source: Daily Futures

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