Today's Key Market News - Jobs Data Poops on Party

(Stocks in this article: NYSE: CHS, NYSE: BJ, NYSE: GM, NYSE: F, NYSE: TM, NYSE: MAT, NASDAQ: YHOO, NYSE: MTG, NYSE: RDN, NASDAQ: OSIS, NYSE: UST, NASDAQ: AAPL)

The holiday party that started Friday and dragged into Tuesday's trading looks to be over and the rally short-lived, as the employment market follows our script. Wall Street Greek believes we could retest recent lows before the market begins another rally on an inevitable Fed rate cut. Anticipation of the Fed cut is the strongest support to the market right now. However, if the Fed fails to cut rates by a minimum of 50 basis points, we expect to see lower lows. There's probably a greater chance of the Fed cutting less than 50 points then there is chance of a greater rate cut. If the Fed viewed things bad enough to draw a more significant cut, the money police would have acted by now.

Today's report from ADP Employer Services showed job additions in the private sector only increased 38,000 in August, after an addition of a revised 41,000 increase in July. Detractors of the ADP report are now pointing out its notoriety for revision, but we note that the report has been much more accurate since its producers revamped the process and figure. We also believe that it has been short as a predictor, in our view, but has relatively accurately predicted the general health of things later shown by the Labor Department's report. This implies Friday's Employment Situation Report could continue a new trend of weakness it began last month. ADP's figure is its lowest reported since June 2003.

There was a second bit of evidence of economic woes provided this morning by Challenger, Gray & Christmas, who reported planned layoffs soared 85% in August. Most of the weakness was attributed to the financial sector, but we see the retail sector taking the baton soon enough. As consumers put the skids on spending, consolidation will have to take place in retail and other consumer sensitive areas.

ICSC-UBS reported weekly same-store sales figures today, showing a continuation of soft trends. Week-to-week sales rose 0.2%, while sales increased 2.3% year-over-year. Trends were running much hotter just a year ago. Many retailers are now reporting August sales, and Chico's FAS (NYSE: CHS) for one, showed weakness, with its August same-store sales falling 9.3%. BJ's Wholesale Club (NYSE: BJ) reported an August same-store sales rise of just 1.4%.

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