Stocks Jump After January Jobs Report; Dow Tops 14,000
NEW YORK (TheStreet) -- Major U.S. stock averages rose more than 1% Friday on the back of robust gains in January as traders focused on upward revisions in the latest payroll report and anticipated continued accommodative policy from the Federal Reserve in light of the lukewarm January jobs release.
Friday marks the first day of the month, a day that traditionally sees strong inflows of money into equities.
The markets have also been pleased with fourth-quarter earnings reports by and large. According to data from Thomson Reuters, the blended estimate for the fourth quarter, which reflects reported results and analyst expectations, is for year-over-year growth of 3.8% for S&P 500 companies, up from 0.1% in the third quarter. Forty eight percent of S&P 500 companies have reported so far.
The Dow Jones Industrial Average surged by 149 points, or 1.1%, to 14,010. The blue-chip index earlier broke 14,000 for first time since 2007. The Dow gained 0.8% for the week.Breadth was extremely positive, with winners topping losers 28 to two. AT&T (T), Bank of America (BAC), Verizon (VZ) and United Technologies (UTX) shares were posting the sharpest gains. Chevron (CVX) also traded higher. Chevron posted fourth-quarter earnings of $3.70 a share versus the average analyst estimate of earnings of $3.04 a share amid improvements in its downstream operations. Results in the 2012 period included a gain of $1.4 billion from an upstream asset exchange. Shares were up 1.2% on Friday. Merck (MRK) and Hewlett-Packard (HPQ) declined. Exxon, the world's biggest oil company, reported fourth-quarter earnings of $2.20 a share, beating the Wall Street target of $2 a share amid profit margin strength in its refining business. Revenue came in at $115.17 billion, compared with estimates of $117.25 billion. Shares were little changed. Drugmaker Merck posted fourth-quarter earnings of 83 cents a share on revenue of $11.7 billion, beating the average analyst estimate of 81 cents a share on revenue of $11.48 billion. The company said it expects full-year 2013 revenue to be near 2012 levels on a constant currency basis, and that at current exchange rates sales would be affected unfavorably by about 1% to 2%. Shares slid 3.3%. The S&P 500 jumped 15 points, or 1.01%, to 1,513. The index climbed 0.7% for the week. The Nasdaq rose 37 points, or 1.2%, to 3,179. The tech-heavy index increased 0.9% in the past five sessions. All sectors in the broader market were firmly planted in the green, spearheaded by gains in consumer non-cyclicals, consumer cyclicals, basic materials, technology, services, financials, basic materials and conglomerates. In a report Friday, Cantor Fitzgerald noted that equity mutual funds and ETFs garnered a record $78 billion of money inflows in January, and that contrarians should be greatly concerned by these unprecedented inflows. "Extremely high inflows into equities do not bode well for the medium-term performance of the stock market," the Cantor note said. "On average, the S&P 500 fell 0.8% in the three months following the previous nine largest monthly inflows into equity MFs and ETFs, and three-month returns were negative after six of those nine months." The Bureau of Labor Statistics said Friday that 157,000 jobs were added to payrolls in January; figures for December were revised higher to 196,000. On average, economists expected 160,000 jobs to be added in January. The unemployment rate ticked up to 7.9% from 7.8%. Economists expected the rate to remain at 7.8%. "Revisions rather than the guts of the January data is what make this a pretty good report," said Eric Green, global head of research for rates and foreign exchange at TD Securities. "Still, the Fed is looking at job growth and participation rates even more than unemployment. Taken together, recent data on all three do not put the Fed any closer to terminating QE," its bond-buying program. "In general, the report is consistent with more QE; the labor market is gradually healing and making progress, but there are no real signs of substantial improvement," said Julia Coronado, chief North American economist at BNP Paribas. A gain of 166,000 was recorded for nonfarm private payrolls for January, versus an upwardly revised 202,000 for December. Expectations were for an increase of 165,000. A flood of other economic reports in the morning generally took on a more positive tone. The final read on The Reuters/University of Michigan's consumer sentiment index for January was 73.8, up from the prior estimate of 71.3. Economists predicted a read of 71.5. The ISM Manufacturing survey showed an increase in January to 53.1 from 50.7 in December. A reading of 50.6 was expected. The Census Bureau reported that construction spending rose 0.9% in December after ticking up by an upwardly revised 0.1% in November. Forecasts called for a 0.6% rise in December. Gold for April delivery climbed $8.60 to settle at $1,670.60 an ounce at the Comex division of the New York Mercantile Exchange, while March crude oil futures were up 22 cents at $97.71 a barrel. The benchmark 10-year Treasury slipped 11/32 to dilute the yield to 2.028%. The dollar was off 0.04%, according to the U.S. dollar index. In corporate news, Dell (DELL), the PC maker, is close to an agreement to sell itself to a buyout group led by founder and CEO Michael Dell and private-equity firm Silver Lake Partners, Reuters reported, citing two people familiar with the matter. A deal could possibly be announced as soon as Monday, Reuters reported. Shares popped 3%. Bristol-Myers Squibb (BMY) is seeking a buyer for a collection of brands in Mexico and Brazil that could fetch as much as $750 million, The Wall Street Journal reported, citing people familiar with the matter. Shares rose 2.1%. Wynn Resorts (WYNN) shares added 0.92% after the casino operator posted disappointing quarterly earnings Thursday evening amid revenue declines driven by a 9.7% fall in revenues at its Macau operations. Metlife (MET) shares added 2.3%. The company said it's acquiring BBVA's Chilean pension business for about $2 billion. Ingersoll-Rand (IR) shares rose 1.9% after the industrial and commercial products company posted better-than-expected fourth-quarter results, though said it was cautious about a slow-growth economy in 2013. Audience ( ADNC) shares surged 15% after the provider of voice and audio solutions posted a fourth-quarter profit and saw its sales soar amid increased adoption of its technology in mobile devices. Celsion ( CLSN) shares plunged 13%. The oncology drug development company's Thermodox failed to delay or halt the re-growth of liver tumors. -- Written by Andrea Tse and Joe Deaux in New York. >To contact the writer of this article, click here: Andrea Tse.
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