Stocks Surge in Week of Big News
NEW YORK (
) -- Stocks finished mildly higher on Friday after trading in a tight range as investors absorbed stronger-than-expected October job growth and an unchanged unemployment rate of 9.6% against the backdrop of the
Federal Reserve's
plan to purchase $600 billion more of U.S. Treasury debt.
The
Dow Jones Industrial Average
rose 9 points, or 0.1%, to 11,444. The
S&P 500
was up by 5 points, or 0.4% at 1225 and the
Nasdaq Composite
was higher by 1 point, or 0.06%, at 2578.
For the week, the Dow and Nasdaq each rose 2.9%, and the S&P 500 gained 3.6%.
The
U.S. economy added 151,000 jobs in October -- the first time it has added jobs since May -- after shedding 41,000 in September, according to the Labor Department's non-farm payrolls report. The increase was more than double what economists had been expecting with forecasts for job growth of 60,000, according to Briefing.com, and gains were significantly helped by private sector job growth of 159,000. The unemployment rate, however, remained at 9.6%, around where it has hovered since May.
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The stubbornly high unemployment rate was one of the reasons the Fed cited on Wednesday for enacting a second round of quantitative easing. The Fed said it will purchase $600 billion of longer-term Treasury securities to help lower interest rates and support economic growth. Global markets cheered the news on Thursday and in the U.S., the Dow hit a fresh intraday high of 11,434.84 and closed at its highest level since Sept. 8, 2008.
The Labor Department also said hourly earnings rose 0.2% from 0.1%, previously. The average workweek ticked up to 34.4, while economists had expected it to hold at 34.2 hours.
President Barack Obama praised strong private sector job growth over the last several months but said much still has to be done to improve the employment situation in America. Obama also expressed his openness to any idea that would speed job growth.
"It was a good number, but I think the market's reaction today is more reflective of what we've seen over the last couple of months and really a reaction to yesterday's rally," said TC Robillard, managing director at Signal Hill Capital. "The fact that these stocks are flattish tells me that most of this has already been priced into the market. That said, 150,000 job adds is still pretty low considering the overall unemployment picture, so I wouldn't say an improving job market is fully baked in, but it is a good data point.
"I wouldn't say today marks an all-clear signal because I do think you'll continue to see some month-to-month oscillation, but if you look ahead to the next six to 10 months, I think the general direction is for improvement," he said.
Concerns about the job market drove investors to less risky assets. Gold prices hit new highs and the December gold contract gained $14.60, or 1.1%, to settle at $1,397.70 an ounce. The dollar was up 0.9% against a basket of currencies.
Elsewhere in commodity markets, the December crude oil contract added 36 cents, or 0.4%, to settle at $86.85 a barrel.
Prices on the benchmark Treasury note fell after rallying on Thursday. The 10-year Treasury note weakened 13/32, lifting the yield to 2.538%.
Pending home sales declined by 1.8% in September after two months of gains, the National Association of Realtors said. Year over year, sales are 24.9% lower. The dip upset economists' expectations for September growth of 2.5%, according to Briefing.com.
Japan's Nikkei soared 2.9% after the
Bank of Japan
kept overnight interest rates at the zero-to-0.1% level and outlined plans to buy assets to support its economy. Hong Kong's Hang Seng jumped 1.4%. In Europe, the FTSE in London rose 0.4% and the DAX in Frankfurt gained 0.5%.
Consumer credit unexpectedly rose to $2.1 billion in September after declining $4.9 billion in August, the Federal Reserve said. According to Briefing.com, economists had anticipated a drop of $3.5 billion.
Capital goods and retail stocks showed some of the strongest gains Friday while health care and food stocks, weighed on the market.
Financials were also on the rise after regulators gave
banks in strong standing the green light to raise dividends. Large banks such as
JPMorgan Chase
(JPM) - Get Report
,
Wells Fargo
(WFC) - Get Report
,
U.S. Bancorp
(USB) - Get Report
and
PNC Financial Services
(PNC) - Get Report
are likely to be among the first to hike payments to investors.
Across the health care sector,
Pfizer
(PFE) - Get Report
,
Merck
(MRK) - Get Report
,
Sanofi Aventis
(SNY) - Get Report
and
Amgen
(AMGN) - Get Report
were among the prominent losers.
On the Dow, JPMorgan,
Alcoa
(AA) - Get Report
and
Bank of America
(BAC) - Get Report
were top performers while
Kraft Foods
(KFT)
,
Merck
(MRK) - Get Report
and
Microsoft
(MSFT) - Get Report
were the biggest laggards.
Shares of
Kraft Foods
(KFT)
were down by 2.2% at $31.08. The company's price target and estimates were cut by Goldman Sachs, which cited Kraft's lower margins.
AIG
(AIG) - Get Report
reported a third-quarter loss from continuing operations of $3.97 a share on revenue of $19.1 billion. Adjusted for nonrecurring items, AIG's loss was $1.47 a share. According to Briefing.com, consensus estimates called for a profit of $1.35 a share. The stock was up 1.9% to $45.61.
Shares of
Symantec
(SYMC) - Get Report
gained 3.8% to $17.20 after a
New York Post
story suggested that the software company is facing increased pressure from activist shareholders to split its security and storage segments into separate businesses.
Shares of
The Washington Post
(WPO)
rose 3.7% to $398.38 after it said third-quarter per-share earnings more than tripled to $6.84 a share and sales rose 7.3% to $1.19 billion on gains across its education division and newspaper ad sales.
Coventry Health Care
(CVH)
shares traded 5.9% higher to $24.87 after the company doubled its third-quarter earnings and increased its full-year forecast by more than $1 a share.
Shares of
Starbucks
(SBUX) - Get Report
were up 3.8% to $30.87 after the company reported better-than-expected earnings of 37 cents a share and sales of $2.8 billion late Wednesday.
Beazer Homes
(BZH) - Get Report
swung to a fourth-quarter loss on a 20% slump in new orders. The homebuilder reported a wider-than-expected loss from continuing operations of 78 cents a share on sales of $274.8 million. Analysts expected a loss of 46 cents a share on sales of $255.3 million. Shares were up by 4.2% at $4.51.
Fluor
(FLR) - Get Report
shares were up 9.5% to $54.53 after the company expanded its buyback program by 7.2 million shares and increased its 2011 earnings guidance to between $3 and $3.40 a share.
Shares of
HSBC
(HBC)
that trade in New York were down by 2.4% to $55.55 after the bank said the rate of economic recovery in the emerging markets it serves might slow.
--Written by Melinda Peer and Shanthi Venkataraman in New York
.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
