Bank Stocks Rise As U.S. Labor Force Grows

NEW YORK (TheStreet) -- State Street (STT) was the winner among large-cap U.S. banks on Friday, with shares rising 3.5% to $68.23, as most bank stocks ending the week on a positive note.

The Dow Jones Industrial Average ^DJI rose 1.1%, while the S&P 500 was up 1.3% and the NASDAQ Composite added 1.7%, despite the screaming headlines of disappointing January employment numbers. The KBW Bank Index (I:BKX) rose 0.8% to 67.77, with all but four of the 24 index components ending with gains.

The Bureau of Labor Statistics on Friday said U.S. nonfarm payrolls rose by 113,000 during January, which was well short of the consensus estimate of 189,000, among analysts polled by Thomson Reuters. The January figure was also well below the average 2013 employment growth rate of 194,000 per month.

The U.S. unemployment rate declined to 6.6% in January from 6.7% in December.

But the best news on Friday was that the labor participation rate during January rose by 0.2% to 63.0%. The Bureau of Labor Statistics in its press release said, "After accounting for the annual adjustment to the population controls, the civilian labor force rose by 499,000 in January. Those are encouraging numbers, standing in contrast to the previous month's numbers.

Investors in early January had reacted negatively when the December unemployment rate declined significantly to 6.7% from 7.0% in November, since that "improvement" was driven by a 0.2% decline in the labor participation rate to 62.8%. The labor participation rate declined 0.8% during 2013, with a large number of people leaving the work force.

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