U.S. MARKET AVERAGES

The latest report released by the Labor Department on Friday offered fresh insights into the impact of Katrina, the most costly natural disaster in U.S. history. America's payrolls grew by 56,000 in October, a sign that the nation's job market is slowly regaining ground after the Gulf Coast area was hit by Hurricane Katrina. The unemployment rate dipped to 5% of the labor force.

U.S. stock futures point to a flat market opening on Friday.
S&P 500 futures were down 1 point, nearly even with their fair value. Dow Jones industrial average futures were flat, while Nasdaq 100 futures were down 1.50 points.

ECONOMIC NEWS

Friday morning, the Department of Labor released its report on the employment situation in the month of October, showing that the U.S. economy added fewer jobs than economists had been expecting.

The report showed that non-farm payrolls rose by 56,000 jobs in October following a revised decrease of 8,000 in September. The increase came in well below economist expectations of an increase of about 110,000.

Additionally, Kathleen Utgoff, commissioner of the Bureau of Labor Statistics, noted that the relatively weak growth in the labor market was not attributable to the areas directly affected by Hurricane Katrina.

“Rather, job growth in the remainder of the country appeared to be below trend in October,” Utgoff said. However, she noted, “It is possible, of course, that employment growth for the nation could have been held down by indirect effects of Hurricanes Katrina and Rita.”

The report also showed that the unemployment rate edged down to 5.0 percent in October from 5.1 percent in September, reflecting a smaller labor force. Economists had been expecting the unemployment rate to remain unchanged at 5.1 percent.

The weaker than expected job growth may raise some concern about the strength of the labor market and the economy as a whole.

INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed generally higher with the Nikkei hitting a four-year high above 14,000, boosted by upbeat U.S. economic data and strong confidence in the domestic economy. The index climbed 1.3% on record gains in microchip and banking stocks. Across the region, South Korea’s Kospi rose 0.3%, Singapore Straits Times advanced 0.5%, while the only loser Hong Kong fell 0.3% on property stocks.

European markets lost ground at mid-day on crude oil prices surge and expectations of weaker U.S. markets as a result. Expected payroll data release also weighed on market sentiment. The German DAX 30 lost 0.2%, the French CAC 40 shed 0.2%, while London’s FTSE 100 gained 0.1%, supported by oil majors.

OIL, METALS, CURRENCIES

Crude oil prices pulled back below $62 a barrel after jumping $2 on Thursday. Light sweet crude December delivery fell 49 cents to $61.29 a barrel. Heating oil lost 2 cents to $1.8075 a gallon, and so did gasoline, presently trading at $1.6073. Natural gas tumbled 18 cents to $11.505 per 1,000 cubic feet. London Brent dropped 61 cent to $59.91.

Gold traded mixed in Europe. In London the precious metal was fixed at $461.35 per troy ounce, up from $460.50. In Zurich gold rose to $461.18 from $460.25. In Hong Kong gold fell $3.30 to close at $461.45. Silver opened at $7.56, up from $7.52.

The U.S. dollar grew stronger against its major counterparts. The euro was quoted at $1.1943, down from $1.1944. The dollar bought 117.60 yen, up from 117.12. The British pound traded at $1.7661, down from $1.7702.

EARNINGS NEWS

Quanta Services Inc. (PWR: chart), network services company, reported that Q3 net profit more than tripled to 11 cents a share, beating analyst estimate of 7 cents a share on 13% revenue growth and improved spending in industries that company serviced as well as the infrastructure work needed after the major hurricanes boosted results. Quanta predicts Q4 earnings between 6 and 8 cents a share on revenue between $450 million and $480 million.

Redwood Trust, Inc. (RWT: chart), specialty finance firm, reported a Q3 net income decline of 22% from the year-ago period to $2.21 a share on higher operating expenses caused primarily by continued growth in personnel. Core earnings came in at $1.22 a share, down vs. $2.29 a share.