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

(RTTNews) - After ending the previous session sharply lower, stocks showed a substantial rebound during trading on Friday. The markets benefited from a positive reaction to much better than expected monthly jobs data.

The major averages saw further upside going into the close, with the Dow reaching a new record closing high. The Dow jumped 167.80 points or 1.1 percent to 15,761.78, the Nasdaq soared 61.90 points or 1.6 percent to 3,919.23 and the S&P 500 surged up 23.46 points or 1.3 percent to 1,770.61.

For the week, the major averages turned in a mixed performance. While the Nasdaq edged down by 0.1 percent, the Dow advanced by 0.9 percent and the S&P 500 rose by 0.5 percent.

The rally on Wall Street came following the release of a report from the Labor Department showing much stronger than expected October job growth despite the government shutdown.

The report said non-farm payroll employment jumped by 204,000 jobs in October compared to economist estimates for an increase of just 120,000 jobs.

Job growth in the two previous months was also much stronger than previously estimated. Employment in August and September rose by 238,000 jobs and 163,000 jobs, respectively.

While the report initially raised concerns about the outlook for the Federal Reserve's stimulus program, traders seemed to be expressing optimism that the economy is strong enough to withstand tapering.

A separate report released by the Commerce Department showed that personal income increased by more than expected in the month of September. The report also showed a modest increase in personal spending that matched economist estimates

On the other hand, Thomson Reuters and the University of Michigan released a report that unexpectedly showed a continued deterioration in consumer sentiment in the month of November

Among individual stocks, shares of Disney (DIS) moved to the upside after the entertainment giant reported fiscal fourth quarter earnings of 77 cents per share, up from 68 cents per share last year. Revenues rose 7.3 percent to $11.6 billion. The results exceeded estimates.

Sector News

In a marked reversal from yesterday's performance, most of the major sectors showed strong moves to the upside amid broad based buying interest.

Biotechnology stocks posted particularly strong gains on the day, regaining some ground after falling sharply over the past few sessions. The NYSE Arca Biotechnology Index surged up by 3.8 percent, bouncing off its worst closing level in a month.

Nektar Therapeutics (NKTR) helped lead the biotech sector higher, with biopharmaceutical company jumping 21 percent after reporting better than expected third quarter results.

Substantial strength was also visible among banking stocks, as reflected by the 3.4 percent gain posted by the Dow Jones Banks Index. Regions Financial (RF) and Zions Bancorp (ZION) turned in two of the sector's best performances.

Networking stocks also showed a considerable upward move on the day, driving the NYSE Arca Networking Index up by 2.7 percent.

Brokerage, oil service, airline, and chemical stocks also saw notable strength, more than offsetting weakness in the commercial real estate and housing sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index dropped by 1 percent, while Hong Kong's Hang Seng Index ended the day down by 0.6 percent.

Meanwhile, the major European markets turned mixed over the course of the trading session. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the German DAX Index closed just below the unchanged line and the French CAC 40 Index fell by 0.5 percent.

In the bond market, treasuries moved sharply lower on the heels of the better than expected jobs data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 13.3 basis points to 2.746 percent.

Looking Ahead

Next week, trading could be impacted by reaction to the Senate Banking Committee's hearing on Janet Yellen's nomination to be the next Federal Reserve Chairman.

Reports on the U.S. trade balance, labor productivity, industrial production, and weekly jobless claims may also attract some attention.

On the earnings front, Cisco (CSCO), Wal-Mart (WMT), Applied Materials (AMAT) and Tyco (TYC) are among the companies due to report their quarterly results next week.