ADP Jobs Report Boosts Stocks In Early Trading

The market was set for a lower open, after news leaked out that regulators told BAC and Citi that they both need to address capital requirements. But when the ADP jobs report came out, it quickly reversed any early selling pressure, and the market actually opened considerably higher (it has since faded).

The latest ADP employment report showed that job losses in April totaled -491,000, which is well below the 645,000 in job losses expected. The official jobs report from the govt. comes out on Friday, and while the ADP report hasn't been the best indicator of the govt. report, it does reflect the general direction. The consensus for the Friday payrolls report is -610,000.

As for the banks need to raise capital, subsequent reports indicate that BAC might not need to raise more outside capital, but instead need to increase the proportion of its common equity, which can be done through conversion of preferred shares. This is esoteric stuff, but the stock's reaction (+7.5%) today speaks to the fact that this outcome could be less onerous than initially feared.

Asian markets closed higher overnight, led by Hong Kong (+2.5%); the dollar is mixed so far, while oil and gold are both trading higher; the 10-year yield is up a bit to 3.17%; and the VIX is near new low levels for the year at 33.40.

Trading comment: No change to my near-term outlook yet. The higher opening was a bit frustrating, but currently the Nazz is back in the red, and the SPX has given up most of its gains as well. I am still trying to be patient awaiting a little more of a pullback. Yesterday, I took some profits on my URBN position, and was stopped out on MYGN.

long URBN, SSO