Nonfarm payrolls added only 113,000 jobs in January
U.S. stocks finished the week with modest gains on Friday, 07 February 2014 after a two-day rally helped indexes break a streak of weekly losses. On Friday investors shrugged off disappointing January jobs gains and instead focused on the more positive details in the government's report. The unemployment rate ticked down while the labor force participation rate edged up.
The Dow Jones Industrial Average closed near session highs, adding 165.55 points, or 1.1%, to 15,794.08. The blue-chip index gained 0.6% over the past week, ending a two-week losing streak. The S&P 500 closed up 23.59 points, or 1.3%, at 1,797.02 and recorded a 0.8% weekly gain after three straight weeks of losses. The Nasdaq Composite ended the day 68.74 points, or 1.7%, higher at 4,125.86, gaining 0.5% for the week.
Six out of ten economic sectors ended higher led by the industrial sector. The sector drew strength from the likes of Boeing and Honeywell while transports lagged.
Friday's economic data was limited to just two reports. Nonfarm payrolls added only 113,000 jobs in January. That was up from a 75,000 (from 74,000) gain in December, but well below the consensus expectation of a 175,000 gain. Even though the claims data have shown improvements in labor conditions and a clear decline in layoff trends, it has not translated into employers hiring more workers. The construction sector actually added 48,000 new jobs in January, which was the most new jobs since 80,000 jobs were added in March 2007. Total private payrolls added 142,000 jobs in January, up from an 89,000 gain in December. The consensus expected private payrolls to increase by 161,000. The unemployment rate fell to 6.6% from 6.7% while the consensus expected the rate to remain at 6.7%.
Separately, the consumer credit report for December showed credit growth of $18.80 billion while the consensus expected the reading to come in at $11.50 billion. The prior month's reading was revised higher to $12.40 billion from $12.30 billion.
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Immediately after the release, equity futures and the dollar/yen pair tumbled while gold futures and Treasuries rallied.
Adding to the positive sentiment were upbeat earnings from Expedia. Shares surged 14% after the company's quarterly profits beat estimates. Shares of Activision Blizzard jumped 14%. The videogame company reported a 51% decline in fourth-quarter profit late Thursday, but shares rallied as adjusted results beat expectations.
Apple shares rose 1.4% after the Wall Street Journal reported the company bought $14 billion of its own shares in the two weeks since reporting results that left investors disappointed.
Shares of LinkedIn fell 6.2% after the social network for professionals posted a weak outlook, though fourth-quarter results topped analysts' forecasts late Thursday.
Bullion prices ended higher on Friday, 07 February 2014. Gold futures on Friday tallied a third-straight session climb as investors mulled the U.S. labor data's potential influence on the Federal Reserve's monetary policy. Metals trimmed gains as U.S. equities climbed in the wake of the data.
Gold for April delivery rose $5.70, or 0.5%, to settle at $1,262.90 an ounce on the Comex division of the New York Mercantile Exchange. The contract was up 1.9% from its close a week ago. Prices for the precious metal had risen by more than $14 an ounce immediately after the jobs report, then trimmed over half that gain as U.S. equities climbed and investors saw some upbeat aspects to the report. March silver which was also buoyed by the data, briefly turned south, but settled up almost a cent at $19.936 an ounce. It saw a sizable gain of 4.3% for the week.
Crude Oil futures rallied on Friday, 07 February 2014 tacking on nearly 3% for the week after briefly topping $100 a barrel shortly before the close of the trading session on the New York Mercantile Exchange. Prices found support from a rally in U.S. equities and a climb in heating-oil and gasoline futures as analysts suggested there was plenty of strong data lingering beneath the surface of the U.S. jobs report, offering hope for a better outlook on oil demand.
March crude oil climbed $2.04, or 2.1%, to settle at $99.88 a barrel on the New York Mercantile Exchange. Futures prices saw a gain of 2.5% from their $97.49 close last Friday.
Participation was a bit above average as 751 million shares changed hands at the NYSE.
There is no economic data on Monday's schedule.
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