Upbeat Jobs Data Leads To Rally On Wall Street - U.S. Commentary

(RTTNews) - Stocks moved mostly higher over the course of the trading day on Friday after fluctuating earlier in the session. The markets benefited from a positive reaction to the Labor Department's closely watched monthly employment report.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow jumped 147.29 points or 1 percent to 15,135.84, the Nasdaq climbed 35.71 points or 1 percent to 3,479.38 and the S&P 500 rose 16.48 points or 1 percent to 1,631.89.

With the strong gains on the day, the major averages all moved higher for the holiday-interrupted week. The Nasdaq surged up by 2.2 percent, while the Dow and the S&P 500 advanced by 1.5 percent and 1.6 percent, respectively.

The strength on Wall Street came following the release of the report from the Labor Department showing stronger than expected job growth in the month of June.

The report said non-farm payroll employment increased by 195,000 jobs in June, matching the revised job growth seen in May. Economists had been expecting employment to increase by about 165,000 jobs.

Despite the stronger than expected job growth, the unemployment rate came in unchanged at 7.6 percent. The unemployment rate had been expected to edge down to 7.5 percent.

While the strong job growth generated some optimism about the economic outlook, the report did not seem to raise concerns about the Federal Reserve's stimulus program due to the unemployment rate holding steady.

The Fed has indicated that it will maintain its asset purchase program at the current pace until the unemployment rate drops closer to 7 percent.

Buying interest was also generated in reaction to the remarks European Central Bank President Mario Draghi delivered while the U.S. markets were closed on Thursday.

In a press conference after the ECB announced its decision to leave interest rates unchanged, Draghi said rates are likely to remain low for an extended period of time.

Sector News

Banking stocks turned in some of the market's best performances on the day, resulting in a 2.6 percent gain by the KBW Bank Index. With the gain, the index reached its best closing level in almost five years.

Within the banking sector, KeyCorp (KEY), Zions Bancorp (ZION) and SunTrust Banks (STI) posted standout gains.

Considerable strength was also visible among brokerage stocks, as reflected by the 2.4 percent gain posted by the NYSE Arca Broker/Dealer Index. The index also reached a nearly five-year closing high.

Trucking, oil service, and biotechnology stocks also saw significant strength, moving to the upside along with most of the other major sectors.

Meanwhile, gold stocks moved sharply lower on the day, dragging the NYSE Arca Gold Bugs Index down by 3.5 percent. The weakness in the sector came as gold for August delivery plunged by $39.20 to $1,212.70 an ounce.

Housing stocks also came under pressure over the course of the session, resulting in a 1.7 percent drop by the Philadelphia Housing Sector Index.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index surged up by 2.1 percent, while Hong Kong's Hang Seng Index jumped by 1.9 percent.

Meanwhile, the major European markets moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.7 percent, the French CAC 40 Index tumbled by 1.5 percent and the German DAX Index plunged by 2.4 percent.

In the bond market, treasuries fell sharply in reaction to the upbeat monthly jobs report. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 21.4 basis points to a nearly two-year closing high of 2.715 percent.

Looking Ahead

Following the slew of data released over the past week, the economic calendar for next week is relatively light. Nonetheless, trading could be impacted by reports on weekly jobless claims, producer prices, and consumer sentiment as well as the minutes of the latest Fed meeting.

Additionally, aluminum giant Alcoa (AA) is scheduled to release its second quarter results after the close of trading on Monday, marking the unofficial start of earnings season.