» » Stocks Rally As February Job Losses Come In Narrower Than Forecast – U.S. Commentary

Stocks Rally As February Job Losses Come In Narrower Than Forecast – U.S. Commentary

(RTTNews) – Stocks rose by substantial margins on Friday, as news that the U.S. economy shed fewer jobs than expected in February fueled buying interest. The major averages showed notable upward moves on the day, with the Nasdaq reaching its best closing level in well over a year.

This morning, the markets keyed in on a report from the Labor Department showing that the economy lost 36,000 jobs in February following a revised decrease of 26,000 jobs in January.

The relatively modest decline surprised economists, who had expected a more substantial loss of about 68,000 jobs amid the impact of severe winter weather in parts of the country.

The report also revealed that the unemployment rate in February remained unchanged from the previous month at 9.7 percent. The unemployment rate had been expected to tick up to 9.8 percent.

Commenting on the data, Rob Carnell, chief international economist at ING, said, “Overall, this was a positive set of labor market data, and aside from the fact that the headline numbers are heavily distorted, they should provide some comfort about the U.S. economic recovery.”

The markets were able to build on their already strong gains after the Federal Reserve reported that consumer credit unexpectedly showed a modest increase in the month of January.

Consumer credit increased by about $5.0 billion in January following a revised decrease of about $4.6 billion in December. The increase came as a surprise to economists, who had expected credit to decrease by about $4.5 billion.

With the unexpected increase, consumer credit rose for the first time since January 2009, marking the biggest increase since July of 2008.

The major averages held steady in late day trading, closing near their best levels of the day. The Dow advanced by 122.06 points or 1.2 percent to end at 10,566.20, the Nasdaq closed up 34.04 points or 1.5 percent at 2,326.35 and the S&P 500 rose by 15.72 points or 1.4 percent to 1,138.69.

The rally helped the major averages to a strong weekly outing. The Dow and the S&P 500 reached their best closing levels in over a month, rising by 2.3 percent and 3.1 percent, respectively, while the Nasdaq gained 3.9 percent for the week, closing at an eighteen-month high.

Sector News

Biotechnology stocks saw some of the day’s strongest gains, with the NYSE Arca Biotechnology Index advancing by 4.2 percent and closing at a fresh historic high.

InterMune (ITMN) boosted the sector, surging up by 59.3 percent after the company said it will meet with a FDA panel next week to discuss drug candidate Pirfenidone.

Significant strength was also visible among steel stocks, which drove the NYSE Arca Steel Index up by 3.1 percent. The index rose for a seventh straight session, reaching a six-week high.

Commercial real estate stocks also saw significant buying interest, prompting a 2.7 percent gain by the Morgan Stanley REIT Index. The advance lifted the index to its best closing level in over two months.

Electronic storage, banking, housing and networking stocks were some of the other strongest performing sectors on the day, boosting the major averages.

Dow Components

Boeing (BA) was the leading percentage gainer in the Dow, advancing by 3.6 percent and extending its winning streak. Shares of the airplane maker have seen an upward trend over the past two weeks and ended the session at a nineteen-month closing high.

America Express (AXP) also closed notably higher, rising by 3.4 percent. With the advance, shares of the credit card giant ended the day at a six-week high.

Alcoa (AA), JP Morgan Chase (JPM) and Disney (DIS) were among the other Dow leaders on the day, contributing to the triple-digit gain by the blue chip index.

Meanwhile, Microsoft (MSFT) and Verizon (VZ) were the only two Dow components to end the day in the red, with both edging down by 0.1 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region rose by notable margins on Friday. Japan’s benchmark Nikkei 225 Index advanced by 2.2 percent, while Hong Kong’s Hang Seng Index gained by 1 percent.

The major European markets also posted strong gains. The U.K.’s FTSE 100 Index and the German DAX Index rose by 1.3 percent and 1.4 percent, respectively, while the French CAC 40 Index closed up by 2.1 percent.

In the bond markets, treasuries closed notably lower. The yield on the benchmark ten-year note, which moves opposite of its price, closed at 3.682 percent, posting a gain of 7.6 basis points.

Looking Ahead

Next week, data on the trade deficit, retail sales, consumer sentiment and the traditional weekly jobless claims report are likely to garner attention from the markets, which continue to be on the lookout for the next step in the economic recovery.

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