MarketView for December 18

Summary

Stocks rose on Friday in choppy trade as quarterly results from Oracle and Research In Motion lifted the Nasdaq more than 1 percent, While at the same time the dollar's climb upward curbed gains in both the Dow and the S&P 500. The Nasdaq was led higher by Oracle, up 6.4 percent to close at $24.34, and Research In Motion, up 10.3 percent at $69.99.

For the week, the Dow fell 1.3 percent, the S&P shed 0.3 percent and the Nasdaq rose 1 percent. The declines snapped a two-week winning streak for the Dow and a three-week series of gains for the S&P 500.

Despite the lift from these earnings-related stories, the robust dollar sapped much of the broader market's strength. The dollar index climbed as much as 0.6 percent, but pared gains late in the session, easing some of the selling pressure on stocks. For the day, the U.S. dollar index ended just marginally higher -- up 0.03 percent.

A strong U.S. dollar forces investors who have bet on a decline in the greenback to cover their short dollar positions by selling equities or other assets. Geopolitical concerns supported the flight to the U.S. dollar following reports that Iranian troops had entered Iraqi territory and raised the Iranian flag at an oilfield whose ownership is disputed by Iran.

Shares of multinational companies suffered somewhat from the rise in the value of a dollar. For example, Caterpillar fell 0.6 percent to $57.19, while Boeing Co was the worst drag on the Dow, off 1.9 percent at $53.44.

Trading was choppy as Friday marked the expiration of December options and futures, a convergence known as quadruple witching that often means increased volatility as big investors adjust or exercise derivatives positions.

In addition the market was set to see an adjustment to the S&P 500. Visa, up 2.2 percent at $88.97, is among companies that will be the newest additions to the benchmark index after the close.

Unemployment Is Coming Down

According to the latest data, it would appear that the unemployment level is definitely on a decline, not a steep decline but a decline nonetheless. More states reported a drop in unemployment in November than posted increases, according to Friday’s report by the Labor Department. The national unemployment rate fell to 10 percent last month as joblessness fell in 36 states and the District of Columbia, according to the Labor Department's survey on state unemployment. The rate rose in eight states and held steady in six. The last time unemployment rates declined in more states than they climbed in was April.

However, there are still 15 states reporting jobless rates above the national average. And all 50 states and the nation's capital recorded increases in their jobless rates from a year ago. In October, 29 states and the District of Columbia posted month-over-month increases in unemployment, and 13 reported rates above the national rate, which had hit a 26-year high of 10.2 percent.

With 14,000 job losses during the month, Michigan had the highest unemployment rate, at 14.7 percent; although, that was down from 15.1 percent in October. This is the 12th straight month that Michigan, which has been ravaged by the collapse of the auto industry, has posted an unemployment rate above 10 percent. However, Michigan is still far from its recorded high of 16.9 percent unemployment in November 1982.

Rhode Island had the next highest rate at 12.7 percent, followed by California, Nevada and South Carolina, each at 12.3 percent. North Dakota continued to post the lowest unemployment rate, showing 4.1 percent in November. It was followed by Nebraska, at 4.5 percent and South Dakota, at 5.0 percent.

A majority of states showed very slight month-over-month increases or decreases in their unemployment rates, but a few had significant jumps. The jobless rate in Kentucky fell to 10.6 percent from 11.3 percent, while it dropped to 8.2 percent from 8.8 percent in Connecticut. The unemployment rate in Florida rose to 11.5 percent from 11.3 percent the previous month.

Unemployment continued to be the lowest in the Northeast region of the country, coming in at 8.7 percent. The West again had the highest regional jobless rate, at 10.6 percent, though that was a slight decline from the previous month.