Wall Street remained in positive territory Friday afternoon, leaving the Dow on track for its best pre-Labor Day week in two decades, as the markets focused on a stronger-than-expected jobs report rather than a gloomy service-sector index.
Today’s Markets
As of 12:30 p.m. ET, the Dow Jones Industrial Average rose 71.60 points, or 0.69%, to 10391.78, the S&P 500 gained 8.50 points, or 0.78%, to 1098.60 and the Nasdaq Composite picked up 19.48 points, or 0.88%, to 2219.42. The FOX 50 added 5.02 points, or 0.64%, to 792.30.
While the markets were still solidly in the green and on track for a rare four-day winning streak, the Dow had been up as much as 130 points before the weaker-than-expected service-sector data. After initially rallying, economically-sensitive stocks like General Electric (NYSE:GE) pared their gains and crude oil turned sharply negative.
This week’s rally, which is on pace to become the Dow's best pre-Labor Day performance since 1990, has largely been sparked by new data on labor, manufacturing and home sales that, while still weak, suggest fears of a double-dip recession may have been overblown. Wall Street has also received a boost from the latest M&A action, including Friday’s $3.4 billion acquisition of Australia’s Andean Resources by Goldcorp (NYSE:GG).
Most of the Dow's 30 components were solidly higher Friday morning, led by Caterpillar (NYSE:CAT), JPMorgan Chase (NYSE:JPM) and Boeing (NYSE:BA). The index's worst performers were defensive plays AT&T (NYSE:T) and Verizon (NYSE:VZ).
The Nasdaq Composite outperformed the broader markets, gaining 1% as technology stocks like SanDisk (NASDAQ:SNDK) and Amazon.com (NASDAQ:AMZN) rallied.
U.S. markets began their ascent immediately after the Labor Department said the U.S. lost 54,000 jobs in August, beating forecasts from economists for a loss of 100,000 jobs. The government also said the U.S. added a stronger-than-expected 67,000 private-sector jobs last month, further boosting market sentiment. The unemployment rate ticked up 0.1 percentage points to 9.6% as job seekers reentered the labor markets and the government sharply cut its job-loss estimate from July.
While Friday’s jobs report significantly beat consensus forecasts and Wall Street’s low expectations, it is important to remember the labor picture remains very gloomy. At the end of the day, fewer people held jobs in August than did in July and the fact the U.S. is still losing jobs at this point of the recovery is discouraging.
In contrast to this week’s stronger-than-expected reports, the Institute for Supply Management said service-sector growth slowed down in August. ISM’s non-manufacturing index slid from 54.3 in July to 51.6 last month, missing forecasts for 53.0. A reading above 50 indicates expansion. Digging into the report, the business activity and employment components stood at their lowest levels since January and the new orders components fell to December 2009 levels.
After initially rallying on the jobs report, crude oil turned sharply negative. Crude was recently down $1.33 a barrel, or 1.77%, to $73.69. Copper sank 0.01% a pound to $3.4950. Gold dropped $1.80 a troy ounce, or 0.14%, to $1,251.60.
