A better-than-expected jobs report on Friday capped the fourth-straight week of advances. And the major stock indices closed at their highest levels since November.
Financial stocks led the way, but every sector of the S&P 500 (SPX) gained. JPMorgan (JPM) rose 4%, American Express (AXP) gained 4.4%, and AIG (AIG) rose more than 20% after posting its first profit since 2007.
Homebuilders finished the day 7.2% higher. Beazer Homes (BZH) reported a lower loss than expected and the stock gained more than 15%. Pulte Homes (PHM) gained 6.4%.
Before the 8:30 a.m. jobs report, you could have cut the tension with a knife. But instead of a disappointment, the Labor Department reported that non-farm payrolls fell by 247,000 jobs in July, the smallest decline since August 2008, and below the expected fall of 275,000. The unemployment rate dropped 0.1% to 9.4%.
At Friday’s close, the Dow Jones Industrial Average (DJI) rose 114 points to 9,370, the S&P 500 gained 13 points to 1,010, and the Nasdaq (NASD) was up 27 points to 2,000.
The NYSE traded 1.4 billion shares with advances ahead of decliners by 4-to-1. On the Nasdaq, 692 million shares crossed with advancers ahead by 9-to-4.
For the week, the Dow gained 2.2%, the S&P 500 was up 2.3%, and the Nasdaq rose 1.1%.
September crude oil futures fell $1.01 to $70.93 a barrel, as a rising U.S. dollar offset the upbeat jobs report. The Energy Select Sector SPDR (XLE) fell 6 cents to $50.83.
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Gold futures also fell due to a stronger dollar, with the December contract down $3.40 to $959.50 an ounce.
What the Markets Are Saying
On Friday, I opined about the jobs numbers. Like everyone, I was concerned that we might have to deal with the market’s reaction to a nasty report. Instead the report was positive and so was the market, and that supports the view that momentum will likely take the market to new highs.
But even with good news, the former leading index, the Nasdaq, is having a tougher time making new highs.
On Friday, it missed again, closing at just about the midpoint of the day’s trading range and smack on our near-term target of 2,000. On top of that, the Nasdaq received a sell signal from the Moving Average Convergence/Divergence (MACD) indicator.
The S&P 500 closed at 1,010.48, just above our near-term target of 1,005 to 1,010. But the Dow has been lagging and is still about 300 points shy of our near-term target of 9,650.
At such lofty levels it would be wise for traders to nail down some profits, especially on stronger days, while long-term investors should hold and focus on pullbacks as opportunities for further gains.
The dollar rose with the more positive jobs report, but the trend for the dollar is still down, so the following groups are still positive sectors for future investment:
- Precious Metals
- Emerging Markets (both fixed income and equities)
- Energy
- Homebuilders (undervalued and moving up)
- Oil Service
- Banks (but overvalued)
- Mid-cap Stocks
- Small-cap Stocks
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Today’s Trading Landscape
Earnings to be reported include: AAON, Abovenet, Abraxas Petroleum, Advanced Photonix, Advanta Corp., AliCo., Allied Capital Corp., American Oil & Gas, Array BioPharma, Assisted Living Concepts. AVI BioPharma, BIDZ.com, BioMimetic Therapeutics, Boots and Coots International Well Control, BPZ Resources, Cardiac Science, Care Investment Trust, Carrizo Oil & Gas, Cascal N.V., China Fire & Security Group, Chinacast Education Corp., Chindex International, Clear Channel Outdoor Holdings, Compass Diversified Holdings, Constellation Energy Partners LLC, Cousins Properties, CPFL Energia, Deerfield Capital Corp., Digitalglobe, DISH Network Corp., Dot Hill Systems Corp., DTS, Dynegy, Echostar Corp., Energy Transfer Equity LP-UT, Energy Transfer Partners, Enerplus Resources Fund, Enterprise Group Holdings LP, EV Energy Partners LP, Express-1 Expedited Solutions, Fluor Corp., Force Protection, Full House Resorts, FX Energy, General Steel Holdings, Government Properties Income Trust, Gran Tierra Energy, GSE Systems, GTx, Healthcare Realty Trust, Henan Zhongpin Food Share Co Ltd., Holly, Houston Wire & Cable Co., HQ Sustainable Maritime Industries, HRPT Properties Trust, I-Flow, Integrated Electrical Services, Inter Parfums, Interval Leisure Group, Kohlberg Capital Corp., Kongzhong Corp., Lions Gate Entertainment, Loral Space & Communications, Maguire Properties, Maiden Holdings Ltd., MarkWest Energy Partners LP, Matrixx Initiatives, McDermott International, Mindray Medical International Ltd., Molecular Insight Pharmaceuticals, Morgans Hotel Group, Motorcar Parts of America, MYR Group, Neenah Paper, Nelnet, Northgate Minerals Corp., Nuance Communications, Parexel, Parkervision, Partner Communications, Perfect World, Petroleum Development, Priceline.com, Providence Service Corp., Qiagen N.V., Quest Software, Quicksilver Gas Services LP, Quicksilver Resources, Rackspace Hosting, Regency Energy Partners LP, Relm Wireless Corp., Rockwell Medical Technologies, Salix Pharmaceuticals, Sanders Morris Harris Group, Schawk, Sterling Construction Co., Stifel Financial, Stonemor Partners LP, Sysco Corp., Telefonica de Argentina, The E.W. Scripps Co., TransMontaigne Partners LP, Unica Corp., Universal Display, UTEK Corp., Vanda Pharmaceuticals, and Virgin Mobile USA.
There are no major economic reports due today.
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