Stocks added to modest gains by mid-afternoon Friday, putting them on track for their highest closing level of the year, after manufacturing data supported a recovery.
The S&P 500 was up 0.37% on Friday, the first day of April and the first day of the second quarter. The Dow Jones Industrial Average climbed 0.38%, and the Nasdaq was up 0.6%. Benchmark indexes started the day in the red.
Two separate reads on the manufacturing sector supported a recovery. The final reading of the Markit U.S. manufacturing PMI for March reached 51.5, above a flash reading of 51.4. Economists have shown some weariness over the health of the industry as a stronger U.S. dollar deters international demand.
A separate read on the manufacturing sector showed factory activity expand for the first time in six months in March. The Institute of Supply Management's manufacturing index climbed to 51.8 last month, up from 49.5 in February. Any reading higher than 50 indicates expansion. Economists had expected a reading of 51.
"The reading indicates the first month of expanding activity for the industry since last August, when the weight of the strong dollar, collapsing commodity prices and weakening global growth began choking off activity," Wells Fargo analysts wrote in a note. "While many challenges persist for the industry, the report offers some indication that the worst of the manufacturing slump may be over."
Crude oil remained around the $37-mark despite a decline in active oil rigs in the U.S. over the past week. The number of active U.S. rigs drilling for crude oil fell by 10 to 362, while the total number of drilling rigs decreased by 14 to a record low of 450.
Prices remained sharply lower, though, after Saudi Arabian Prince Mohammad Bin Salman said the oil-producing country would only participate in a production freeze if Iran and other Organization of Petroleum Exporting Countries members agree to chip in.
"It is by far the strongest statement by the largest oil state in the Middle East on oil freeze," said Abhishek Deshpande, lead oil markets analyst at Natixis. "This reflects the Kingdom's reluctance to cut or freeze production alone from the beginning whilst being happy to go along with it as Russia was leading the talks. The prince also said that Saudi Arabia was ready to weather the oil crisis by reforming its economy. Iran on the other hand has also said they will join the Doha talks but will not participate in the freeze."
OPEC members will meet in Doha to discuss production levels on April 17, but investors are concerned no agreement will result. A report earlier this week showed OPEC output rose in March as Iran introduced more supply onto markets after sanctions were lifted. West Texas Intermediate crude oil was down 3.4% to $37.04 a barrel on Friday.
The energy sector was the worst performer on markets Friday. Major oilers including Exxon Mobil (XOM) , Chevron (CVX) , BP (BP) , and ConocoPhillips (COP) were all lower, while the Energy Select Sector SPDR ETF (XLE) fell 1.5%.
The U.S. economy added 215,000 jobs to nonfarm payrolls in March, according to the Labor Department. Economists anticipated 210,000 jobs to have been added last month. February's job gain was raised to 245,000 from 242,000. The unemployment rate ticked up to 5%, its highest since May 2015. Wages rose 2.3% in the past 12 months, while average hourly wages climbed 0.3% to $25.43. The average workweek was flat at 34.4 hours.
"This was an unambiguously positive labor market report, and even though the unemployment rate ticked modestly higher it was all for good reasons, as the increase in the participation rate underscores increased confidence among previously displaced workers in the labor market recover," said Millan Mulraine, deputy chief U.S. macro strategist at TD Securities. "For the Fed, this report will reinforce their confidence in the sustainability of the labor market and overall economic activity. Nevertheless, with the focus continuing to be on global developments it is unlikely to change the current wait and see monetary policy bias at the Fed."
There are risks in moving too soon or waiting too long to hike rates, warned Cleveland Fed President Loretta Mester in an address to the New York Association for Business Economics Friday afternoon. Mester said the risks include increased market volatility. The Fed currently projects two rate hikes this year, down from previous forecasts for four.
Stocks closed out March with their best monthly performance since October thanks to dovish Fed comments and a stabilization in oil prices. Wall Street managed to recover from its worst start to a year since 2009. March's solid performance helped to push the S&P 500 and Dow into the green for the year overall.
Construction spending unexpectedly declined in February, down 0.5% to a seasonally adjusted rate of $1.14 trillion. The decline was off of an upwardly-revised January number, according to the Commerce Department. Economists had expected a 0.1% increase.
Consumers continued to show their nerves in March as the University of Michigan's consumer sentiment survey fell for its fourth straight month. The reading fell to 91 from 91.7 in February, driven lower by a rise in gas prices. The results were slightly higher than an initial reading of 90.
The Detroit Three were on watch as each reported their March sales numbers. All of the carmakers reported a sales increase, boosted by warmer weather last month and a few additional selling days to draw out consumers.
General Motors (GM) reported a 0.9% increase in unit sales, well short of estimates for a 6% increase. Fiat Chrysler (FCAU) enjoyed an 8% increase in unit sales, driven by double-digit growth in both car and truck sales. Ford (F) also reported 8% growth in unit sales, though that was below forecasts of a 9% increase.
Starwood Hotels (HOT) fell 4% after Chinese firm Anbang walked away from its $14 billion proposed takeover. Anbang had submitted an opposing and superior bid to Marriott's (MAR) original offer. Marriott and Starwood will hold an investor call Friday morning.
Tesla (TSLA) jumped 3.1% after receiving a positive response to the unveiling of its Model 3 vehicle overnight at its Los Angeles design studio. The vehicle does not go on sale until late 2017, but has already received more than 115,000 reservations. The electronic car is priced at $35,000, more affordable and mass-market friendly than its previous models.
BlackBerry (BBRY) shares sank 7% after the smartphone company reported an adjusted quarterly loss of 3 cents a share, far narrower than an expected loss of 13 cents. The company expects software and services growth of about 30% in fiscal 2017. The company has diversified to specialize in enterprise software so as not to directly compete with Apple (AAPL) products in the smartphone game.
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