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Stocks Close Mostly Higher But Off Best Levels - U.S. Commentary

While the latest news regarding Greece pulled stocks down off their highs late in the trading day on Friday, the markets still saw strength on the day on the heels of the release of better than expected U.S. employment data.

The major averages closed well off their best levels but still finished the session in positive territory. The Dow edged up 14.08 points or 0.1 percent to 12,922.02, the Nasdaq rose 17.92 points or 0.6 percent to 2,988.34 and the S&P 500 climbed 4.96 points or 0.4 percent to 1,370.87.

Despite the higher close on the day, the major averages turned in a mixed performance for the week. While the Dow fell by 0.4 percent, the Nasdaq rose by 0.4 percent and the S&P 500 inched up by 0.1 percent.

Stocks moved mostly higher in morning trading following the release of a report from the Labor Department showing stronger than expected job growth in the month of February.

The report showed that employment increased by 227,000 jobs in February following an upwardly revised increase of 284,000 jobs in January. Economists had expected employment to increase by about 204,000 jobs compared to the increase of 243,000 jobs that had been reported for the previous month.

At the same time, the Labor Department said that the unemployment rate remained unchanged from the previous month at 8.3 percent, in line with economist estimates.

Chris Low, an economist at FTN Financial, said, "The unemployment rate held steady despite a sizable increase in the labor force, and the increase in the labor force itself suggests improving confidence in the job market and a higher participation rate."

Traders also reacted positively to news that the Greek government successfully completed a debt swap agreement with 85.8 percent of its private sector bondholders. With the activation of collective action clauses, the participation rate rose to 95.7 percent.

However, stocks gave back ground late in the day after the International Swaps and Derivatives Association said it has determined that the exercise of the collective action clauses triggered a credit event, resulting in a payout on credit default swaps.

Among individual stocks, shares of Smith & Wesson (SWHC) surged up by 22.8 percent after the gun maker reported better than expected third quarter results and raised its full year guidance.

Zumiez (ZUMZ) also moved higher on the day after forecasting first quarter results above analyst estimates. Shares of Zumiez rose by 6.2 percent.

On the other hand, shares of Texas Instruments (TXN) fell by 1 percent after the chip maker warned over weaker than previously expected first quarter results.

Sector News

Housing stocks saw considerable strength on the day, extending the strong upward move seen over the two previous sessions. Reflecting the strength in the sector, the Philadelphia Housing Sector Index jumped 2.5 percent to its best closing level in almost two years.

M/I Homes (MHO) and D.R. Horton (DHI) turned in two of the housing sector's best performances, advancing by 6.9 percent and 6.3 percent, respectively.

Significant strength was also visible among electronic storage stocks, as reflected by the 2 percent gain posted by the NYSE Arca Disk Drive Index. Within the sector, Western Digital (WDC) and NetApp (NTAP) posted strong gains on the day.

Trucking, semiconductor, and banking stocks also showed notable moves to the upside on the day but closed well off their best levels. On the other hand, some railroad stocks came under pressure over the course of the trading day.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday, adding to the gains posted in the previous session. Japan's Nikkei 225 Index advanced by 1.7 percent, while Hong Kong's Hang Seng Index rose by 0.9 percent.

The major European markets also moved to the upside on the day. While the French CAC 40 Index edged up by 0.3 percent, the U.K.'s FTSE 100 Index and the German DAX Index ended the day up by 0.5 percent and 0.7 percent, respectively.

In the bond market, treasuries closed modestly lower on the heels of the upbeat jobs data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 2.4 basis points to 2.038 percent.

Looking Ahead

Traders are likely to keep a close eye on the Federal Reserve next week, with the central bank due to hold a monetary policy meeting on Tuesday. Reports on retail sales, industrial production, and consumer price inflation may also attract attention.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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