Stocks Close Higher Following Upbeat Jobs Report - U.S. Commentary

(RTTNews) - After failing to sustain an early upward move, stocks fluctuated over the course of the trading session on Friday but managed to maintain a largely positive bias. The higher close on the day came on the heels of the release of upbeat jobs data.

The major averages ended the day in positive territory but off their early highs. The Dow edged up 44.79 points or 0.2 percent to 20,902.98, the Nasdaq climbed 22.92 points or 0.4 percent to 5,861.73 and the S&P 500 rose 7.73 points or 0.3 percent to 2,372.60.

Despite the advance on the day, the major averages closed lower for the week. While the Nasdaq edged down by 0.2 percent, the Dow and the S&P 500 fell by 0.5 percent and 0.4 percent, respectively.

The early strength on Wall Street came following the release of a report from the Labor Department showing stronger than expected job growth in the month of February.

The Labor Department said non-farm payroll employment jumped by 235,000 jobs in February after surging up by a revised 238,000 jobs in January.

Economists had expected employment to climb by about 195,000 jobs compared to the addition of 227,000 jobs originally reported for the previous month.

With the stronger than expected job growth, the unemployment rate edged down to 4.7 percent in February from 4.8 percent in January, matching expectations.

The report also said the annual rate of growth in average hourly employee earnings accelerated to 2.8 percent in February from 2.6 percent in January.

"Taking it altogether we have a picture of strong job creation with the tightening labor market increasingly generating wage and inflationary pressures," said ING Senior Economist James Knightley.

While the report generated some buying interest, traders seemed reluctant to make significant moves ahead of the next week's Federal Reserve meeting.

The upbeat jobs data has reinforced expectations of an increase in interest rates at the meeting, with CME Group's FedWatch tool indicating a 93.0 probability of a quarter-point rate hike by the central bank.

Sector News

After moving sharply lower over the past few weeks, gold stocks showed a substantial move back to the upside on the day. The NYSE Arca Gold Bugs Index surged up by 2.9 percent after ending the previous session at its lowest closing level in well over two months.

The rebound by gold stocks came despite a modest decrease by the price of the precious metal, as gold for April delivery dipped $1.80 to $1,201.40 an ounce.

Housing stocks also saw notable strength on the day, resulting in a 1.1 percent advance by the Philadelphia Housing Sector Index. With the gain, the index reached a nearly eleven-month closing high.

The strength among housing stocks was partly due to the Labor Department report showing a significant increase in employment in the construction industry.

Electronic storage, semiconductor and airline stocks also saw some strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index surged up by 1.4 percent, while Hong Kong's Hang Seng Index rose by 0.3 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index edged down by 0.1 percent, the U.K.'s FTSE 100 Index climbed by 0.4 percent and the French CAC 40 Index rose by 0.2 percent.

In the bond market, treasures showed a lack of direction for much of the session before closing modestly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 1.6 basis points to 2.582 percent.

Looking Ahead

The Fed meeting is likely to be in the spotlight next week, with the central bank due to announce its decision on interest rates next Wednesday.

The announcement from the Fed may overshadow some key economic data, including reports on retail sales, producer and consumer price inflation, housing starts, and industrial production.