Benchmarks moved higher on Friday, following an unanticipated
boost in U.S. jobs growth in October. Consequently, the S&P
500 moved up for the week, following its worst performance in ten
weeks on Thursday. The increasing prospect of the Federal Reserve
tapering its stimulus program starting December raised bond
yields. A few domestic reports were also released on Friday,
providing data on non-farm payrolls, personal income, and the
Michigan Consumer Sentiment index. The financial sector was the
biggest gainer among the S&P 500 industry groups. Utilities
sector stocks were the only group to finish in the red.
For a look at the issues currently facing the markets, make sure
to read today's
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) gained 1.1% to close the
day at 15,761.78. The S&P 500 rose 1.3% to finish Friday's
trading session at 1,770.61. The tech-laden Nasdaq Composite
Index jumped 1.6% to end at 3,919.23. The fear-gauge CBOE
Volatility Index (VIX) tumbled 7.26% to settle at 12.90.
Consolidated volumes on the New York Stock Exchange were roughly
3.9 billion shares. Advancing stocks outnumbered the decliners.
For 56% shares that advanced, only 42% declined.
Major indices ended on a high on Friday. The S&P 500 index
recovered from its worst fall in ten weeks, following a better
than anticipated jobs report. Investors are now taking into
account whether the economy is strong enough to withstand a
reduction in monetary stimulus. Jobs data has increased the
belief that the Federal Reserve could cut back on its stimulus
program in December.
The U.S. Department of Labor reported non-farm payroll numbers.
Total non-farm payroll employment increased by 204,000 in
October, higher than the consensus estimate of 114,000. The
unemployment rate increased marginally from 7.2% to settle at
Going further into the details of the jobs numbers, leisure and
hospitality jobs rose 53,000. Food services and drinking places
contributed to 29,000 new jobs, retail trade jobs accounted for
44,000, and jobs in professional and technical trade services
increased by 21,000. Jobs in management and technical consulting
services increased by 8,000. Manufacturing jobs contributed to
19,000. Healthcare jobs increased over the month by 15,000.
Also, Federal employees on furlough during the partial government
shutdown were still considered to be employed during the payroll
survey. This is because they worked or received pay for the pay
period that included the 12th of the month.
The U.S. Department of Commerce released personal income and
consumption expenditures numbers. Personal income increased by
$67.4 billion or 0.5%, whereas disposable personal income (DPI)
increased by $64.8 billion or 0.5%, in September. According to
the Bureau of Economic Analysis, Personal Consumption Expenditure
(PCE) increased by $24.7 billion or 0.2%. In August personal
income increased $65.6 billion, or 0.5%, DPI increased by $66.3
billion or 0.5%. PCE increased $39.8 billion, or 0.3%, based on
revised estimates. Real disposable personal income increased 0.4%
in September, the same as in August. Real Personal Consumption
Expenditures (PCE) increased 0.1% in September, compared to an
increase of 0.2% in August.
Additionally, the Thomson Reuters/University of Michigan
reported consumer sentiment numbers. The preliminary consumer
sentiment index fell to 72 in November from the previous month's
reading of 73.2. This was marginally below the consensus estimate
of 74.6. Consumer sentiment may have taken a hit due to fears
that the Fed may begin tapering its bond purchases from next
month itself, given the slew of positive data.
BANK OF AMER CP (BAC): Free Stock Analysis
BERKSHIRE HTH-B (BRK.B): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
DUKE ENERGY CP (DUK): Free Stock Analysis
EXELON CORP (EXC): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
PPL CORP (PPL): Free Stock Analysis Report
SOUTHERN CO (SO): Free Stock Analysis Report
SEMPRA ENERGY (SRE): Free Stock Analysis
WELLS FARGO-NEW (WFC): Free Stock Analysis
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The financial sector was the biggest gainer among the S&P 500
industry groups and the financial sector SPDR (XLF) gained 2.3%.
Stocks such Berkshire Hathaway Inc. (BRK.B), Wells Fargo & Co
(WFC), JPMorgan Chase & Co. (JPM), Bank of America Corp
(BAC), Citigroup Inc. (C) gained 1.8%, 2.4%, 4.5%, 3.8%, 3.3%,
Utilities stocks emerged as the sole loser and the utilities
sector SPDR (XLU) lost 0.2%. Stocks such as Duke Energy Corp
(DUK), the Southern Company (SO), Exelon Corporation (EXC),
Sempra Energy (SRE), and PPL Corporation (PPL) declined 0.7%,
0.8%, 0.8%, 0.6%, and 0.5%, respectively.