Disappointing job reports weighed on immediate rate hike chances, which in turn led the benchmarks to close in the green on Friday. Reducing rate hike possibilities boosted the debt-dependent sectors like utilities. Moreover, rising crude production freeze possibilities by major oil producing nations boosted oil prices and had a positive impact on energy stocks. All the three key U.S. indexes rose more than 0.5% for the week.
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The Dow Jones Industrial Average (DJI) increased 0.4%, to close at 18,491.96. The S&P 500 also rose 0.4% to close at 2,179.88. Further, the tech-laden Nasdaq Composite Index closed at 5,249.90 gaining 0.4%. The fear-gauge CBOE Volatility Index (VIX) decreased 11.1% to settle at 11.98. A total of around 3.1 billion shares were traded on Friday on the NYSE. Advancers significantly outpaced declining stocks on the NYSE. For 78% stocks that advanced, 19% declined.
What Supported the Benchmarks?
According to the Bureau of Labor Statistics (BLS), the U.S. economy created a total of 151,000 jobs in August, considerably lower than the consensus estimate of 179,000. It was also significantly lower than July's revised job number of 275,000. The unemployment rate in August of 4.9% was higher than the consensus estimate of 4.8%, it was in line with July's rate. The average hourly earnings gained 0.1% or only 3 cents in August from July to $25.73 per hour. It was also lower than the consensus estimate of 0.2% and July's 0.3% increase.
Disappointing job reports in August decreased Fed rate hike chances in September, which in turn boosted utilities stocks. The Utilities Select Sector SPDR (XLU) increased 1.3% and was the best performer among the S&P 500 sectors. Key utilities stocks including Duke Energy Corporation ( DUK ), NextEra Energy, Inc. ( NEE ) and Southern Company ( SO ) rose 1.2%, 1.8% and 1.2%, respectively.
Moreover, Russian President Vladimir Putin reportedly said on Friday that if major oil producers agree to freeze crude output, it might be a "right decision for world energy."
WTI and Brent crude rose 2.9% and 3% to $44.44 per barrel and $46.83 a barrel, respectively. Increase in oil prices led the Energy Select Sector SPDR (XLE) to rise 1.1%, which emerged as the second biggest gainer among the S&P 500 sectors. Both the Dow components Chevron Corporation ( CVX ) and Exxon Mobil Corporation ( XOM ) increased 0.7%.
In other economic news, factory orders rebounded in July. Orders increased 1.9% in July after falling 1.8% in June, registering its highest increase since October 2015.
For the week, The Dow, S&P 500 and Nasdaq increased 0.5%, 0.5% and 0.6%, respectively. Fed Chair Janet Yellen's hawkish comments and upbeat consumer data and private sector jobs report raised rate hike chances. Rising rate hike possibilities led the financial sector to become the biggest advancer among the S&P 500 sectors during the week. However, sluggish manufacturing activity and drop in oil prices following oversupply concerns curtailed some of weekly gains.
Stocks that Made Headlines
Per Bloomberg news, Facebook Inc. ( FB ) has crushed a bid for a class action lawsuit that accused the Facebook of "automatically and surreptitiously" giving advertisers access to personal information of its users. ( Read More )
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