Markets failed to sustain Friday's initial gains, spurred by a
fall in the unemployment rate, and ended mixed. The unemployment
rate was at its lowest since 2009 and that helped benchmarks secure
gains in the morning session. However, the benchmarks came off
their highs with some apprehensions ahead of the start of earnings
season. For the week though, benchmarks had a winning run and ended
with gains after closing in the red for two weeks. Moreover, the
Dow notched up its highest level since December 2007.
The Dow Jones Industrial Average (DJI) ended 0.3% higher at
13,610.15. The Standard & Poor 500 (S&P 500) slipped a mere
0.03% or 0.47 points to close Friday's trading session at 1,460.93.
The tech-laden Nasdaq Composite Index was down 0.4% and closed at
3,136.19. The fear-gauge CBOE Volatility Index (VIX) slipped 1.5%
to settle at 14.33. Total volumes on the New York Stock Exchange
were 3.18 billion shares. The advance and decline ratio on the NYSE
was even; as for 49% stocks that gained, an equal percentage of
stocks ended in the red.
The big news for the day was the government's non-farm payroll
numbers. The non-farm payroll gains were in line with expectations,
but the encouraging side to the report came from the positive
revisions to the preceding two months data and unemployment rate
dropped to its lowest since 2009. The U.S. Bureau of Labor
Statistics reported that total non-farm payroll employment was up
by 114,000, in line with consensus estimates. Apart from
healthcare, transportation and warehousing, the other sectors
showed little change. As for the positive side, the change in total
nonfarm payroll employment was revised higher both for July and
August. While July's figures were revised up from 141,000 to
181,000; August's figures went up to 142,000 from 96,000.
However, the biggest positive for the market was the fact that
unemployment rate dropped by 0.3% to 7.8% last month. Not only was
this well below consensus estimates of 8.2%, but the unemployment
rate dropped below 8% for the first time in almost four years. In
September, the number of unemployed persons fell by 456,000.
Further, the report noted: "The number of job losers and persons
who completed temporary jobs decreased by 468,000 to 6.5
million…The number of persons unemployed for less than 5 weeks
declined by 302,000 over the month to 2.5 million".
The report did have a lot for the financial markets, but also
had implications for the political arena. While President Barack
Obama said: "This country has come too far to turn back now,";
Republican candidate Mitt Romney said: "This is not what a real
recovery looks like".
The non-farm payroll data comes hot on the heels of the
Automatic Data Processing's (NASDAQ:
ADP
) National Employment Report and initial claims data. On Wednesday,
ADP data revealed that U.S. companies added 162,000 jobs in
September, higher than the expected 143,000. On Thursday, the U.S.
Department of Labor reported that seasonally adjusted initial
claims for the week ending September 29 rose 4,000 from the prior
week to 367,000, just shy of the consensus estimates of 368,
000.
As mentioned earlier, benchmarks failed to sustain the gains.
The Dow was up almost 86 points before dropping lower. The third
quarter earnings season is about to kick off and Alcoa, Inc. (NYSE:
AA
) will be reporting its results on Tuesday. Certain market experts
said that the earnings season might not be encouraging enough for
the markets. Through the week, financial bellwethers including
Wells Fargo & Company (NYSE:
WFC
) and JPMorgan Chase & Co. (NYSE:
JPM
) will be reporting their results.
Coming to the sectors, the technology sector had a bad run. The
Technology Select Sector SPDR (XLK) fell 0.5%. Tech bellwether
Apple Inc. (NASDAQ:
AAPL
) slumped 2.1% and other stocks such as NetApp Inc. (NASDAQ:
NTAP
), Oracle Corporation (NASDAQ:
ORCL
), Microsoft Corporation (NASDAQ:
MSFT
), Red Hat, Inc. (NYSE:
RHT
) and Hewlett-Packard Company (NYSE:
HPQ
) dropped 1.5%, 1.6%, 0.6%, 1.1% and 1.4%, respectively.
ALCOA INC (AA): Free Stock Analysis Report
AUTOMATIC DATA (ADP): Free Stock Analysis
Report
HEWLETT PACKARD (HPQ): Free Stock Analysis
Report
(JPM.AAPL): ETF Research Reports
MICROSOFT CORP (MSFT): Free Stock Analysis
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NETAPP INC (NTAP): Free Stock Analysis Report
ORACLE CORP (ORCL): Free Stock Analysis Report
RED HAT INC (RHT): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis
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