Jobs Data Leads To Choppy Trading, Mixed Close On Wall Street - U.S. Commentary

(RTTNews) - Stocks showed a lack of direction throughout much of the trading day on Friday as traders digested the closely watched monthly jobs report. The major averages spent the day bouncing back and forth across the unchanged line before closing mixed.

While the major averages all moved to the upside going into the close, the S&P 500 still ended the day down 0.73 points or less than a tenth of a percent at 2,099.20. The Dow rose 46.90 points or 0.3 percent to 17,910.33 and the Nasdaq climbed 19.38 points or 0.4 percent to 5,147.12.

Despite the mixed performance on the day, the major averages all moved notably higher for the week. The Nasdaq surged up by 1.8 percent, the Dow jumped by 1.4 percent and the S&P 500 advanced by 1 percent.

The choppy trading on Wall Street came after the Labor Department released a report showing much stronger than expected job growth in the month of October.

The strong job growth is a positive sign for the U.S. economy, but the data also increases the likelihood the Federal Reserve will raise interest rates next month.

The report said non-farm payroll employment jumped by 271,000 jobs in October compared to economist estimates for an increase of about 185,000 jobs.

The unemployment rate subsequently fell to a seven-year low of 5.0 percent in October, matching economist estimates.

Chris Low, chief economist at FTN Financial said, "The overriding message from today's employment report is the soft patch is over and the rate hike is on."

"After all, the only reason the Fed did not raise rates in September is a laundry list of stuff—overseas economic weakness, oil patch weakness, strong dollar, market volatility—that might weigh on the U.S. economy," he added. "A strong October payroll number goes a long way toward undermining that concern."

Among individual stocks, shares of Weight Watchers (WTW) moved sharply higher after the weight loss company reported better than third quarter results and raised its guidance.

Entertainment giant Disney (DIS) also moved to the upside after reporting better than expected fourth quarter adjusted earnings but on revenues that were shy of estimates.

On the other hand, shares of Men's Wearhouse (MW) saw a steep drop after the clothing retailer slashed its third quarter and full-year profit outlook.

Sector News

Reflecting concerns about the outlook for monetary policy, interest rate-sensitive utilities stocks saw substantial weakness on the day. The Dow Jones Utilities Average plunged by 3.8 percent, hitting its lowest closing level in nearly two months.

Within the utilities sector, CenterPoint Energy (CNP), Duke Energy (DUK), and Con Ed (ED) turned in some of the worst performances.

Gold stocks also moved sharply lower, dragging the NYSE Arca Gold Bugs Index down by 4.2 percent. The weakness in the sector came as the price of gold for December delivery tumbled $16.50 to $1,087.70 an ounce.

Commercial real estate, railroad, and energy stocks also saw notable weakness, with energy stocks moving lower along with the price of crude oil.

On the other hand, significant strength was visible among financial stocks. Reflecting the strength in the sector, the NYSE Arca Broker/Dealer Index and the Dow Jones Banks Index both surged up by 2.8 percent.

Semiconductor stocks also moved notably higher, driving the Philadelphia Semiconductor Index up by 2.6 percent. Qorvo (QRVO) and Nvidia (NVDA) posted standout gains after reporting better than expected quarterly earnings.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. Japan's Nikkei 225 Index advanced by 0.8 percent, while Hong Kong's Hang Seng Index dropped by 0.8 percent.

The major European markets also ended the day mixed once again. While the U.K.'s FTSE 100 Index edged down by 0.2 percent, the French CAC 40 Index crept up by 0.1 percent and the German DAX Index climbed by 0.9 percent.

In the bond market, treasuries fell sharply in reaction to the upbeat jobs data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.8 basis points to a three-month closing high of 2.333 percent.

Looking Ahead

The economic calendar starts out relatively quiet next week, although reports on producer prices and retail sales are likely to attract attention on Friday.

On the earnings front, Cisco Systems (CSCO), Priceline (PCLN), Macy's (M), and J.C. Penney (JCP) are among the companies due to report their quarterly results next week.