Declining Unemployment Rate Points To Economic Recovery, Can Have Positive Rub-Off On Select Sectors (XOM, CVX, SPY, QQQQ, XLF, M, WMT, BBY)

DECLINING JOBLESS RATES

The U.S. Department of Labor reported that first time jobless claims fell 5000 to a total of 457000 for the week ending November 28 2009. This beats a Bloomberg consensus estimate of economists that had predicted the number to be 480000.

Some economists have warned that the results of the report should be taken with a grain of salt. The period studied included the Thanksgiving holiday, and the better than expected numbers may simply be because employers may have slackened a bit in sending in their figures. However, others state that the analysis which makes an adjustment for seasonality, is an indicator of a reversal in the downturn of the economy.

The Computer Market To Get a Major Boost

With the increase in jobs, pc and laptop dealers like Hewlett Packard (NYSE: HPQ), Dell (NASDAQ: DELL), Lenovo (OTC: LNVGY), Apple (NASDAQ: AAPL) and software makers like Microsoft (NASDAQ: MSFT), IBM (NYSE: IBM) and Google (NASDAQ: GOOG) would also get a boost as more people would be using these computers and software.

Financials

Companies like Bank of America (NYSE: BAC), Citigroup (NYSE: C) and Wells Fargo (NYSE: WSF) are expected to benefit from this improvement in the jobless rates. More people will have money to invest, and financial ETFs like Financial Select Sector SPDR (ETF) (NYSE: XLF) could also do well.

Oil Majors To Get A Boost, XOM, CVX

The report is expected to boost share prices of oil majors as more people will be driving to work. Oil prices have been dropping this week due to an anticipation of poor figures from the report. However the report’s finding will provide a boost to energy majors. Historically oil prices move up during upturns and fall during downturns. Thus investors in companies like ExxonMobil (NYSE: XOM) and Chevron Corp (NYSE: CVX) could see upside.

Equity Is In, Gold Is Out, GLD, SPDR, QQQQ, XLF

Investors in US treasuries and gold ETF’s may see the value of their investments erode as markets factor in the report's findings. Both investment avenues are havens during downturns as investors flee to these relatively safer asset classes. However, a reversal of the downturn, as indicated by the report, could see an increase in risk appetite, thus seeing a movement from these safer havens to stock exchanges. Thus if you are an investor sold on ETF’s , then you are better off moving from gold ETF’s like SPDR (NYSE: GLD) to equity based ETF’s like SPDR S&P 500 ETF (NYSE: SPY), PowerShares QQQ Trust(NYSE: QQQQ) and Financial Select Sector SPDR Fund(NYSE: XLF).

Stay Bullish On Retailers, M,WMT,BBY

Retailers like Macy's (NYSE: MCY), WalMart (NYSE: WMT) and Best Buy (NYSE: BBY) have reported better than expected numbers during Thanksgiving. Today's job report could boost MCY, WMT and BBY's prospects as a reversal of the downturn points to an anticipated increase in consumer spending.