Benchmarks ended higher on Friday after gains in energy and materials shares offset weak jobs data. Rise in oil prices boosted energy and material stocks. Meanwhile, the number of jobs created in September was way short of analysts' expectations, while employment gains for the prior two months were also trimmed. Nevertheless, investors shrugged off dismal jobs data and the major indexes ended in the green. Friday's gains also helped the benchmarks end a choppy week in positive territory.
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The Dow Jones Industrial Average (DJI) jumped 1.2%, or 200.36 points, to close at 16,472.37. The Standard & Poor's 500 (S&P 500) surged 1.4% to close at 1,951.36. The tech-laden Nasdaq Composite Index closed at 4,707.78, gaining 1.7%. The fear-gauge CBOE Volatility Index (VIX) declined 7.1% to settle at 20.94. A total of around 8.3 billion shares were traded on Friday, higher than the last 20-sessions' average of 7.25 billion. Advancers outpaced declining stocks on the NYSE. For 73% stocks that advanced, 25% declined.
Oil prices moved north on Friday after weekly data showed that the number of oil and gas drilling rigs fell to a five-year low in the U.S. Prices of WTI and Brent crude oil gained 1.8% and 0.9% to $45.54 per barrel and $48.13 a barrel, respectively. Rise in oil prices had a positive impact on energy and materials shares, which eventually boosted the broader markets.
The Energy Select Sector SPDR (XLE) gained 4.1%, the highest among the S&P 500 sectors. Dow components Exxon Mobil Corporation ( XOM ) and Chevron Corporation ( CVX ) advanced 2.5% and 4.1%, respectively. Other key stocks from the energy sector including Schlumberger Limited ( SLB ), ConocoPhillips ( COP ) and Kinder Morgan, Inc. ( KMI ) increased 3.9%, 6.3% and 5.3%, respectively.
The Materials Select Sector SPDR ETF (XLB) advanced 2.5% and was the second biggest gainer among the S&P 500 sectors. Key holdings such as The Dow Chemical Company ( DOW ), Monsanto Company ( MON ), LyondellBasell Industries N.V. ( LYB ), PPG Industries, Inc. ( PPG ) and Praxair Inc. ( PX ) increased 3.4%, 1.4%, 2.9%, 2.8% and 1.7%, respectively. Overall, all 10 sectors of the S&P 500 ended in the green.
Meanwhile, weaker-than-expected September jobs report initially raised concerns about slowdown in economic growth and its adverse impact on the Federal Reserve's decision to raise short-term interest rates. According to the Bureau of Labor Statistics, the U.S. economy added 142,000 jobs in September, was significantly lower than the consensus estimate of 202,000. Employment gains for the previous two months were also trimmed by a combined 59,000.
The unemployment rate remained flat at 5.1% in September, though mostly due to labor force participation rate declining to 62.4%, its lowest level since 1977. However, the U6 rate dropped to 10%, its lowest level since June 2008. Separately, average hourly wage of American workers dipped by a penny last month following an increase in August.
Meanwhile, according to the U.S. Department of Commerce, new orders for manufactured goods decreased 1.7% in August. This was wider than the consensus estimate of a 1.2% decline. This reading follows an increase of 0.2% in July. Separately, unfilled orders, shipments and inventories data were down 0.2%, 0.7% and 0.3%, respectively.
For the week, the S&P 500, the Dow and the Nasdaq gained 1%, 0.9% and 0.4%, respectively. Friday's gains in energy and materials stocks helped benchmarks end the week in the green. Friday's gains came in despite economic growth worries due to weak nonfarm payroll data. Meanwhile, better-than-expected jobs data from Automatic Data Processing, Inc. ( ADP ) offset dismal manufacturing data in Chicago on Wednesday, while a recovery in healthcare stocks helped markets end Tuesday's volatile trading session slightly higher.
On the other hand, continuing slump in biotech stocks and weak data out of China dragged down major benchmarks into negative territory on Monday. Decline in industrial profits elevated concerns regarding Chinese economy, which in turn increased global growth worries.
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