Nasdaq scores its first weekly gain of the year
U.S. stocks ended mostly higher on Friday, 10 January 2014 managing to erase losses that had followed a weaker-than-expected jobs report, with the S&P 500 and the Nasdaq Composite recording their first weekly gains this year. The disappointing report pressured the dollar while metals and Treasuries rallied, suggesting a fair amount of participants expect the Fed to delay the next round of tapering.
Bucking the positive trend, the Dow Jones Industrial Average closed 7.71 points lower to 16,437.05, shedding 0.2% over the week, posting its second weekly loss in a row this year. The Nasdaq Composite gained 18.47 points, or 0.4%, to 4,174.66 and added 1% for the week, its first weekly gain this year. After a choppy trading session, the S&P 500 index gained 4.24 points, or 0.2%, to 1,842.37, leaving it up 0.6% on the week, its first weekly gain this year.
The utilities sector was the top gainer. On the downside, the financial sector was the lone decliner.
Among major stocks under focus, Citigroup underperformed the other majors with a loss of 0.9%. Alcoa shares dropped 5.4% after the aluminum producer said it swung to a fourth-quarter loss. The firm also said Thursday it had settled charges of corruption in Bahrain with a $384 million payout to the Securities and Exchange Commission and Department of Justice. Abercrombie & Fitch's shares rallied 12% after the firm raised its full-year adjusted earnings projections. Gap gained 1.1% after saying it expects full-year earnings near the top of its projected range of $2.57 to $2.65.
Prior to the open, it was reported that job growth slowed considerably in December with the addition of just 74,000 jobs. This was well below the consensus, which called for a reading of 197,000. The unemployment rate plunged to 6.7% from 7.0% but that was a result of another sharp drop in the labor force participation rate. Furthermore, aggregate wages fell 0.1% after increasing 0.7% in November. The drop is expected to put downward pressure on consumption growth unless consumers decide to lower their savings rate.
The much weaker-than-expected payrolls number also cast doubt on how quickly the Federal Reserve will move to further scale back the size of its monthly bond purchases, which are the centerpiece of its quantitative-easing program. The Fed in December announced it would reduce purchases by $10 million a month to $75 million beginning this month.
Outside of the aforementioned nonfarm payrolls, investors received another data point on Friday. In November, wholesale inventories increased 0.5%, down from a 1.3% (from 1.4%) gain in October. The consensus expected wholesale inventories to increase 0.2%. Inventory growth over the past few months has been extremely strong, yet similar gains in sales suggest inventory growth trends can remain on the current path. Sales rose 1.0% in November after increasing 1.1% in October.
Bullion prices ended higher on Friday, 10 January 2014. This was after U.S. nonfarm payrolls came in far below expectations on Friday, boosting gold's investment appeal and lifting prices for the precious metal to their highest close in four weeks.
February gold extended Thursday's gains as it popped from its session low of $1226.60 per ounce and continued to trend upwards. It eventually settled 1.4% higher at $1246.60 per ounce, booking a weekly gain of 0.7%. March silver rallied off its session low of $19.66 per ounce and consolidated near the $20.10 per ounce level until late afternoon pit action. It settled 2.8% higher at $20.23 per ounce, gaining 0.1% for the week.
Crude-oil futures climbed on Friday, 10 January 2014 holding on to a rise on the back of Chinese import data and a weaker dollar, despite a much weaker-than-expected rise in December nonfarm payrolls, which bodes ill for the energy-demand outlook.
Crude oil for February delivery added $1.06, or 1.2%, to settle at $92.72 a barrel on the New York Mercantile Exchange. For the week, oil prices still saw a loss of 1.3%, their second-weekly loss in a row.
Trading volume was well below average as only 656 million shares changed hands on the NYSE floor.
Indian ADRs ended higher on Friday. In the IT space, Infosys gained 5.97% at $59.50 and Wipro rose 2.97% at $12.81. In the banking space, ICICI Bank was down 0.3% at $36 and HDFC Bank was up 0.42% at $33.73. Tata Motors added 1.23% at $30.33 and Dr Reddys Laboratories jumped 0.99% at $42.66.
On Monday, the December Treasury Budget will be reported at 14:00 ET.
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