Stocks saw substantial strength during trading on Friday, bouncing back to the upside after moving mostly lower over the course of the four previous sessions. The markets benefited from a positive reaction to the Labor Department's monthly jobs report.
After moving sharply higher in early trading, the major averages remained firmly positive throughout the trading session. The Dow surged up 217.29 points or 1.7 percent to 13,096.17, the Nasdaq jumped 58.13 points or 2 percent to 2,967.90 and the S&P 500 soared 25.99 points or 1.9 percent to 1,390.99.
With the strong gains on the day, the major averages offset the losses posted earlier in the week. The Dow edged up by 0.2 percent for the week, while the Nasdaq and the S&P 500 rose by 0.3 percent and 0.4 percent, respectively.
The rally on Wall Street came on the heels of the release of a report from the Labor Department showing stronger than expected job growth in the month of July.
The Labor Department said non-farm payroll employment increased by 163,000 jobs in July following a downwardly revised increase of 64,000 jobs in June. Economists had expected employment to increase by about 100,000 jobs.
Despite the stronger than expected job growth for the month, the unemployment rate edged up to 8.3 percent in July from 8.2 percent in June. The increase surprised economists, who had expected the unemployment rate to come in unchanged.
The unexpected increase by the unemployment rate came as the more volatile household survey showed that the number of employed persons fell by 195,000 in July, exceeding the decrease in the size of the labor force.
Peter Boockvar, managing director at Miller Tabak, said, "As measured by the payroll survey, the job creation in July was encouraging in light of the growing signs of economic slowdown but wasn't equally matched by the very volatile household survey which fell and was the main factor in the rise in the unemployment rate."
"In terms of impacting Fed policy, this data point will unlikely affect their desire to do more in September if the economy doesn't get any better from here," he added.
A separate report from the Institute for Supply Management showed a slightly faster rate of growth in the service sector.
The ISM said its non-manufacturing index crept up to 52.6 in July from 52.1 in June, with a reading above 50 indicating growth in the service sector. The increase surprised economists, who had expected the index to edge down to a reading of 52.0.
After moving sharply lower in two previous sessions, brokerage stocks showed a strong move back to the upside. The NYSE Arca Broker/Dealer Index surged up by 4.7 percent, bouncing well off a three-year closing low.
A strong gain by Knight Capital Group (KCG) contributed to the rebound by the brokerage sector, with the financial services company jumping by 56.7 percent.
Steel stocks also moved sharply higher on the day amid optimism about the outlook for demand. Reflecting the strength in the steel sector, the NYSE Arca Steel Index jumped by 3.8 percent.
Considerable strength was also visible among electronic storage stocks, as reflected by the 3.2 percent gain posted by the NYSE Arca Disk Drive Index. Quantum (QTM) posted a standout gain, advancing by 9.3 percent.
Most of the other major sectors also showed strong moves to the upside, with networking, banking, healthcare provider and defense stocks posting notable gains.
In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Friday. While Japan's Nikkei 225 Index tumbled by 1.1 percent, China's Shanghai Composite Index surged up by 1 percent.
Meanwhile, the major European markets moved sharply higher over the course of the trading day. The U.K.'s FTSE 100 Index has jumped by 2.2 percent, while the German DAX Index and the French CAC 40 Index spiked up by 3.9 percent and 4.4 percent, respectively.
In the bond market, treasuries came under pressure on the day following the upbeat jobs data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 9.9 basis points to 1.577 percent.
Following the slew of closely watched U.S. economic data released over the past week, the economic calendar for next week is relatively light. Nonetheless, investors are likely to keep an eye on the release of reports on labor productivity, the U.S. trade balance, and import and export prices.
On the earnings front, Disney (DIS), Macy's (M), Tenet Healthcare (THC), Tyson Foods (TSN), Priceline (PCLN), J.C. Penney (JCP), and Nvidia (NVDA) are among the companies due to report their quarterly results next week.
by RTT Staff Writer
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