Stocks rallied Friday in a sharp response to the better-than-expected jobs report for November that virtually assured a rate hike at the Federal Reserve’s Dec. 15-16 policy making meeting. The U.S. Labor Department reported a seasonally adjusted increase of 211,000 in nonfarm payrolls versus expectations for 200,000.
The rally was also helped by ECB President Mario Draghi saying the central bank was open to further stimulus measures.
The Dow Jones Industrial Average jumped 2.1%, its strongest day since Sept. 8, as all 30 stocks closed higher.
One of the biggest advancers was Apple Inc. (AAPL), which rose 3.3%. The stock has been on almost every major firm’s buy list, but has been a disappointment for the past year, gaining just 5.9%.
The financial sector led Friday’s advance, gaining 2.7%. JPMorgan Chase & Co. (JPM) rose 3.1%, and Bank of America Corp (BAC) gained 2.6%.
Nine of the 10 sectors of the S&P 500 rose with only energy falling, down 0.6%. This was the result of OPEC’s decision to maintain current production levels despite oversupply. Oil lost 2.7% at $39.97 a barrel.
Gold was up 2.2% at $1,084.10 an ounce. And the yield on the benchmark 10-year Treasury note fell to 2.28% from 2.33% on Thursday. The euro fell 0.5% against the U.S. dollar to $1.0885.
At Friday’s close, the Dow Jones Industrial Average rose 370 points to 17,848, the S&P 500 gained 42 points to 2,092, the Nasdaq jumped 105 points to 5,142, and the Russell 2000 was up 13 points at 1,183.
The NYSE Composite’s primary exchange traded 999 million shares with total volume of 4.2 billion. The Nasdaq crossed 1.9 billion shares. On both major exchanges, advancers outpaced decliners by 1.9-to-1. On the NYSE, block trades increased to 5,820, up from Thursday’s total of 5,774.
For the week, the Dow was up 0.2%, the S&P 500 rose 0.1%, the Nasdaq gained 0.3%, and the Russell 2000 was down 1.6%.
Despite a strong day on Friday, the S&P 500 has struggled to make headway. However, it recovered the trading zone of 2,050 to 2,080 and its 200-day moving average at 2,065, both genuine positives.
But keep in mind buying volume on Friday was less than selling volume on Thursday, and MACD is still neutral. Massive overhead still threatens to provide buyers with as much stock as they want, and that means making new highs is going to be difficult.
The overall market, as illustrated by all of the stocks traded on the NYSE Composite, has three major resistance points: the triple-bottom of July/August at 10,630, the November high at 10,640, and the December high at 10,523.
The November/December highs connect with several prior highs, forming a bearish resistance line. Above that is the 200-day moving average at 10,701.
Conclusion
With the small- and mid-caps failing their latest technical test (see Friday’s Daily Market Outlook), falling from their respective 200-day moving averages, and the broader market faced with massive overhead, the bulls are struggling.
Since retail sales and services account for over 60% of GDP, and retail sales appear to be lagging, watch for further reports from that sector. I have a hunch that holiday buyers will decide the eventual course of the market. Let’s hope Santa won’t have to take a lot of presents back to the North Pole.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
