Benchmarks ended in the green on Friday as a dismal job report reduced fears among investors about sooner-than-expected rate hike. Moreover, ceasefire agreement between Ukraine and pro-Russian separatists also lifted investor sentiment. The S&P 500 closed at a record high on Friday.
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The Dow Jones Industrial Average (DJI) rose 0.4% to close at 17,137.36. The Standard & Poor 500 (S&P 500) increased 0.5% to close at 2,007.71. The tech-laden Nasdaq Composite Index closed at 4,582.90; gaining 0.5%. The fear-gauge CBOE Volatility Index (VIX) declined 4.4% to settle at 12.09. A total of 5.2 billion shares were traded on Friday, higher than the five-day average of 5.1 billion. Advancers outpaced declining stocks on the NYSE. For 60% stocks that advanced, 36% declined.
Markets were negatively impacted in the initial hours by discouraging nonfarm payroll data. On Friday, the Labor Department reported that the economy added 142,000 new jobs in August. This was significantly lower than the consensus estimate of 224,000. Moreover, the labor participation rate remained almost unchanged at 62.8% in August. This was the lowest level in about 20 years. It has remained at this level since April. However, the unemployment rate declined marginally in August to 6.1% from 6.2% in July.
However, all the major benchmarks closed higher at the end of trading as dismal payroll data reduced the possibility of earlier-than-expected rate hike. The Federal Reserve chairwoman Janet Yellen had earlier mentioned at Jackson Hole, Wyo, that the Fed will focus on the pace of recovery of the labor market before raising rates.
Separately, it was reported that a ceasefire agreement was signed between Ukraine and pro-Russia separatists on Friday. In a NATO summit in Wales, Ukrainian President Petro Poroshenko announced that Ukrainian armed forces have been ordered to cease fire from 6 pm on Friday. Investors welcomed this initiative of Ukraine government to stop the five-month long war.
In company news, shares of Family Dollar Stores Inc. ( FDO
) dropped 1.2% after rejecting Dollar General's ( DG
) $9.1 billion takeover bid. However, the valuation of the offer was higher than the recent $8.5 billion worth acquisition offer from Dollar Tree ( DLTR
). Family Dollar Chief Executive Officer Howard Levine said: "There is a very real and material risk that the transaction proposed by Dollar General would fail to close, after a lengthy and disruptive review process." Shares of Dollar General also declined 2.3%.
Michael Kors Holdings Limited's ( KORS
) shares fell 4.5% on news that Sportswear Holdings Ltd., the biggest share holder in the company, is looking to sell its entire holding of 5.7% in a secondary offering. The value of this entire stake is about $890 million. The retailer was the biggest loser among the S&P 500 companies on Friday.
On the other hand, The Gap, Inc. ( GPS
) reported a 2% sales decline in August, contrary to analysts' expectation of 1.7% gain. The retailer also reported that sales in its brand store declined to 6%, wider than analysts' estimation of 0.4% decline. Shares of Gap slid 4.2%, its biggest one-day loss since Oct 2013.
However, Vertex Pharmaceuticals Incorporated ( VRTX
) was the biggest gainer among the S&P 500 companies. Shares of Vertex jumped 3.8% following a rating upgrade on Friday.
The Utilities Select Sector SPDR (XLU) was the biggest gainer among the S&P 500 sectors. The sector rose 1.3% on Friday. The sector was boosted by a decline in bond yields. Utilities is a high dividend paying sector. Key utilities stocks from the sector such as NRG Energy, Inc. ( NRG
), Southern Company ( SO
), DTE Energy Company ( DTE
) and The AES Corporation ( AES
) rose 2%, 1.4%, 1.4% and 1.4%, respectively. All the 10 S&P sectors gained on Friday.
Over the week, both the Dow Jones Industrial Average (DJI) and Standard & Poor 500 (S&P 500) rose 0.2%. The tech-laden Nasdaq Composite Index increased 0.1%.
Benchmarks swung between gains and losses through the week. Drop in oil demand following discouraging Chinese and European economic data and a stronger dollar dragged down oil prices
. The decline in oil price had a negative impact on the major benchmarks. The Energy Select Sector SPDR (XLE) was the biggest loser among the S&P 500 sectors in the week. The sector declined 0.4%.
However, ECB's announcement of rate cut and new stimulus measures to combat low inflation boosted investors confidence. Apart from job data, other economic data including ISM Services and Manufacturing Indices, construction spending and factory orders were encouraging.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportFAMILY DOLLAR (FDO): Free Stock Analysis ReportDOLLAR GENERAL (DG): Free Stock Analysis ReportDOLLAR TREE INC (DLTR): Free Stock Analysis ReportMICHAEL KORS (KORS): Free Stock Analysis ReportGAP INC (GPS): Free Stock Analysis ReportVERTEX PHARM (VRTX): Free Stock Analysis ReportNRG ENERGY INC (NRG): Free Stock Analysis ReportDTE ENERGY CO (DTE): Free Stock Analysis ReportSOUTHERN CO (SO): Free Stock Analysis ReportAES CORP (AES): Free Stock Analysis ReportTo read this article on Zacks.com click here.