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Employment data disappoints, putting Thursday's gains in jeopardy. Stocks rallied Thursday following mostly better than expected economic data, but these gains look to be short lived thanks to a jobs report that fell short of expectations. Earnings have been mostly positive with AIG (AIG) and Starbucks (SBUX) beating estimates. Overall, analysts feel that until the jobs market shows a turnaround, extended gains for the major market indices are unlikely.

AIG reported its second consecutive quarterly profit with the insurer easily surpassing earnings estimates. AIG made $2.85 a share excluding realized gains and losses, which 87-cents above estimates. AIG shares rallied heading into its report with traders selling the news this morning. AIG shares are down nearly 10 percent in early trading at a price near $35.25.

SBUX shares are up more than 4 percent after the company reported strong earnings and raised its outlook. The coffee shop made 24-cents a share in the quarter, 3-cents above estimates. Revenues fell slightly from the year ago period, but came in above estimates. SBUX noted that more consumers are visiting their stores and are staying longer when they do. SBUX shares are trading near $20.50 with a 52-week range from $7.06 to $21.11.

Of course, the big story Friday has been the employment report, but the news was disappointing. Nonfarm payrolls fell by 190,000 in October, worse than estimates for a drop of 175,000 payrolls. However, September's figure was revised to a drop of 219,000 from the initial reading of -263,000. Payrolls were disappointing, but the most bearish aspect of the report was the rise in the unemployment rate to 10.2 percent. This is the highest unemployment rate in more than 25 years.

General Electric (GE) and Amazon.com (AMZN) received upgrades at Bernstein, sending their respective shares higher. These stocks were raised to "Outperform" from "Market Perform", sending GE shares are higher by more than 5 percent with AMZN shares rising nearly 4 percent.

Despite the disappointment of the jobs report, the bulls are holding on to some minor gains in early trading. However, we could see traders sell as the session comes to a close as we head into the weekend. Unless we see huge declines today, the major market indices will manage solid gains this week, ending a two-week losing streak. The fear indices have indeed come down from resistance at 30, showing that fear has subsided as stocks have risen.

Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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