Stock Market News for October 06, 2014 - Market News
Better-than-expected jobs data helped benchmarks end in the green on Friday. Moreover, impressive trade deficit data also boosted markets to their best gains in months. The Dow witnessed the biggest one-day gain in nearly seven months and the S&P 500 experienced the same in almost two months. However, benchmarks ended in the red for the week.
For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article
The Dow Jones Industrial Average (DJI) rose 1.2%, or 208.64 points, to close at 17,009.69. The Standard & Poor 500 (S&P 500) increased 1.1% to close at 1,967.90. The tech-laden Nasdaq Composite Index closed at 4,475.62; gaining more than 1%. The fear-gauge CBOE Volatility Index (VIX) declined 10% to settle at 14.55. A total of 3.6 billion shares were traded on NYSE on Friday. Advancers outpaced declining stocks on the NYSE. For 65% stocks that advanced, 32% declined.
On Friday, the U.S. Department of Labor reported that the economy added 248,000 new jobs in September, stronger than the consensus estimate of 215,000.The non-farm payroll figure was also higher than 12-month average of 213,000. Additionally, the unemployment rate declined 0.2% to 5.9% in September, hitting the lowest level since 2008. Investor confidence was boosted as encouraging job data was a signal of strength in the economy.
Employment generation in professional and business services was the major contributor to this impressive job data. The sector has generated 81,000 new jobs in September, compared to the 12 month average increase of 56,000. Retail trade and health care sectors also played a vital role in creating jobs in September.
Separately, the U.S. Census Bureau reported that trade deficit declined in August to $40.1 billion from $40.3 billion in July, narrower than the consensus estimate of deficit of $40.8 billion. This was the lowest level of deficit since January. Export increased $0.4 billion in August from that in July to $198.0 billion.
Separately, shares of Mylan, Inc. ( MYL ) jumped over 8% after lifting its third quarter and full year earnings per share guidance. The company now forecasts third quarter adjusted earnings per share between $1.12 and $1.16, compared to its previously guided range of 90 cents to 95 cents. The company also raised its guidance for full year adjusted earnings per share from the range of $3.25-3.45 to $3.44-3.54.
Strong jobs data in the health care sector and impressive performance of Mylan helped the Health Care Select Sector SPDR (XLV) to gain 2.1%. The sector was the biggest gainer among the S&P 500 sectors on Friday. Key healthcare stocks including Alexion Pharmaceuticals, Inc. ( ALXN ), Covidien plc ( COV ), Actavis plc ( ACT ) and Vertex Pharmaceuticals Incorporated ( VRTX ) rose 6%, 5.7%, 4.3% and 3.6%, respectively.
The prices of WTI crude oil and Brent crude oil declined 1.4% and 1.2% to $89.74 and $92.31 per barrel, respectively, on Friday. This had a negative impact on the Energy Select Sector SPDR (XLE), which declined 0.2%. The sector was the only loser among the S&P 500 sectors. Key energy stocks including Cabot Oil & Gas Corporation ( COG ), Chesapeake Energy Corporation ( CHK ), Kinder Morgan, Inc. ( KMI ) and Baker Hughes Incorporated ( BHI ) declined 0.8%, 2.2%, 1.4% and 0.7%, respectively.
Over the week, benchmarks finished in the red zone as violent protests in Hong Kong and disappointing economic data dented investor sentiment. The Dow, S&P 500 and Nasdaq declined 0.6%, 0.8% and 0.8%, respectively.
On Monday, violent confrontation took place between pro-democracy supporters and the Hong Kong government amid China's decision to levy restrictions on how Hong Kong voters elect their leaders.
Moreover, most domestic reports, including Consumer Confidence, construction spending, ISM manufacturing numbers and factory orders were disappointing. Germany's manufacturing activity also dropped to a 15-month low.
Meanwhile, the European Central Bank (ECB) kept key interest rates unchanged and provided few details about asset-backed security purchase program. Previously, interest rate on bank deposits in the central bank was lowered into negative territory by the ECB. New lending and private asset purchasing programs were also introduced. The decision had a negative impact on the benchmarks.
Separately, the first case of Ebola in the US also unnerved investors. Investors rushed to buy drug stocks involved in treatment of Ebola. However, this development negatively affected airline stocks as investors feared that this might hamper air travel to the country.