Market Recap: Oil, Iranian Sanctions, ‘Unexpected’ Spike in Jobless Claims and Euro Bond Auction

Markets closed up on Wall Street today: 

• Dow +0.17 percent
• S&P+0.23 percent
• Nasdaq +0.51 percent
• Oil -1.77 percent
• Gold +0.69 percent

On the commodities front:

• Oil (NYSE:USO) fell to $99.08 a barrel
• Gold (NYSE:GLD) climbing to $1,650.90 an ounce
• Silver (NYSE:SLV) rose 1.02 percent to settle at $30.20

(Related: Major Banks, Credit Card Companies Named in Multi-Billion Dollar Antitrust Suit)

Today’s markets were up because:

1) Bonds: Spain and Italy both had successful debt auctions today that saw borrowing costs fall sharply in the first test of euro-zone bond markets in 2012. The Spanish Treasury raised €10 billion, double its target, as it auctioned three kinds of bonds, while Italy paid less than half what it did a month ago to sell one-year bills.

Spain and Italy both saw the spread between yields on their benchmark 10-year notes and Germany’s benchmark bunds narrow as banks took advantage of cheap three-year loans from the European Central Bank to invest in sovereign debt. Ultimately, the success of today’s European bond auctions, and the expectation of continued success, was enough to outweigh a host of negative economic data today, allowing markets to close slightly up. The euro climbed to $1.2822.

2) Data: Surprise! Jobless claims rose last week, the first week of the New Year, signaling that “improvement” seen in the job market in November and December was most likely the result of temporary holiday hiring. As the holiday shopping season winds down, unemployment will tick upward as retailers let go of temporary hires.

We are not entirely sure how this is being reported as an “unexpected” uptick in jobless claims. Hiring always sees an increase during the “holidays” and then it sees a general downswing in the following months. Why economists were trumpeting December’s numbers as proof of an “improving” economy is anyone’s guess.

In fact, many analysts are starting to believe the Labor Department has been ”overly aggressive” with its seasonal adjustments (and, apparently, Christmas hiring is a foreign concept):

“You mean those employees weren’t permanent? Wait. What was that thing that you hired them for? Christianmass?”

In another bad sign for employment and the economy as a whole, retail sales rose just 0.1 percent in December as lower gas prices and heavy holiday discounts weighed down the value of goods sold. Purchases excluding automobiles fell 0.2 percent in their first decline since May 2010.

3) Oil: The U.S. won Japanese support today for sanctions on Iranian oil that not only threaten the flow of world oil supplies, but also the possibility of war. Iran has refused to terminate a nuclear program it says is entirely peaceful, but Western superpowers suspect the country to be developing nuclear weapons. In response to what it deems to be unjust sanctions, Iran has threatened to block access to the Strait of Hormuz, through which roughly one-fifth of the world’s oil supply is transported.

In what could be another upset to global supply, Nigeria’s main oil union, which has been on strike over the last four days, has threatened to shut down output completely, beginning Sunday, if the government does not reinstate a petrol subsidy that ended January 1, doubling oil prices for Nigerians 150 naira ($0.93) per liter. Nigeria is Africa’s largest oil producer, and exports largely to the U.S., Europe, and Asia.

[Editor’s note: portions of the above originally appeared on Wall St. Cheat Sheet.]