NEW YORK (TheStreet) -- U.S. stock markets returned to calm Friday as risk-off sentiment evaporated on a jobs number that was not too cold and not too hot. It was the "Goldilocks" number that market strategists such as Bill Stone, chief investment strategist at PNC Asset Management Group, were looking for to restore some certainty to the markets.
Nonfarm payrolls rose by 209,000 in July, which was slightly lower than the average 233,000 estimate expected by economists surveyed by Thomson Reuters. However, it still marks the sixth consecutive month of growth exceeding 200,000. It was solid number that was not strong enough to trigger short-term concerns of expedited Federal Reserve rate hiking, and certainly not weak enough to signal economic vulnerabilities. The June number was upwardly revised to 298,000 from 288,000. The markets were now baking in less Fed tightening, offsetting Wednesday's stronger-than-expected GDP rebound.
"In the intermediate term, a stronger economy and more jobs is certainly better for stocks," said Stone. "As long as geopolitical concerns don't intrude, yields should move higher on a better payrolls number."
The S&P 500 (^GSPC) was down just 0.29% to 1,925.15. The Dow Jones Industrial Average (DIA) was down a modest 0.42% to 16,493.37. The Nasdaq (QQQ) was off just 0.39% to 4,352.64. The VIX "fear gauge" retreated by 1.3% to 16.73. All the indices finished negative for the month on Thursday, with the Dow in the red for the year and the VIX spiking more than 27% to 16.98 as mixed earnings reports, concerns about the health of the European economy and financial sector, and the wait for Friday's nonfarm payrolls report rocked the global markets. On Argentina, strategists say many had already seen the second default in 13 years coming, and the event was largely already baked in before Thursday's plunge.
The broader market was also buoyed by upbeat results from Tesla (TSLA - Get Report), consumer products giant Procter & Gamble (PG - Get Report), LinkedIn (LNKD - Get Report) and online travel agency Expedia (EXPE - Get Report) -- a relief after Thursday's round of tepid financial statements. Procter & Gamble popped 3.01% to $79.65 after beating quarterly earnings estimates by 4 cents at 95 cents a share and announcing that it's streamlining its product portfolio by jettisoning up to 100 brands. LinkedIn surged more than 11.5% to $201.78 after exceeding second-quarter earnings estimates by 12 cents at 51 cents a share, driven by 49% growth at its recruiting products unit.
Tesla advanced 4.46% to $233.27 after booking earnings that surpassed expectations by 7 cents at 11 cents a share. Tesla's now on its way to producing 500,000 cars annually by 2020. Expedia jumped 6.35% to $84.46 as strong hotel and air ticket reservations resulted in a positive top- and bottom-line surprise.
Earnings growth outlook continues to improve, with S&P Capital IQ reporting that the Wall Street consensus is for S&P 500 earnings in the second quarter to grow 9.6% over a year ago, up from last Friday's 8.3% estimate. Furthermore, there's been more positive than negative guidance this earnings season compared to the historical, 15-year average.
Friday also brought a number of other economic highlights, with the ISM Manufacturing Index arriving stronger than expected, rising to 57.1 in July from 55.3 in June. The University of Michigan Consumer Sentiment Index was upwardly revised to 81.8 for July from an initially reported 81.3. Although construction spending dropped 1.8% in June, initial prints for this report are highly subject to revisions and total construction spending actually increased 5.5% year-over-year.
-- By Andrea Tse in New York
TheStreet Ratings team rates CHEVRON CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation: "We rate CHEVRON CORP (CVX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CVX's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.02, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has increased to $8,417.00 million or 47.30% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 16.72%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- CVX, with its decline in revenue, slightly underperformed the industry average of 3.5%. Since the same quarter one year prior, revenues slightly dropped by 6.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: CVX Ratings Report