Stocks Holding On To Strong Gains Following Upbeat Jobs Data - U.S. Commentary

(RTTNews) - After moving sharply higher in early trading on Friday, stocks have continued to perform well throughout the session. The markets continue to benefit from a positive reaction to the better than expected employment data released before the start of trading.

The major averages have moved roughly sideways in recent trading, hovering firmly in positive territory. The Dow is up 140.22 points or 0.8 percent at 16,941.27, the Nasdaq is up 44.58 points or 1 percent at 4,474.78 and the S&P 500 is up 17.26 points or 0.9 percent at 1,963.43.

The strength on Wall Street comes following the release of a report from the Labor Department showing much stronger than expected job growth in the month of September.

The report said non-farm payroll employment jumped by 248,000 jobs in September compared to economist estimates for an increase of about 215,000 jobs.

Partly reflecting the stronger than expected job growth, the unemployment rate fell to 5.9 percent in September from 6.1 percent in August, hitting its lowest level in over six years.

However, the drop by the unemployment rate was also partly due to another decrease in the size of the labor force, which fell by 97,000.

The Labor Department said the labor force participation rate edged down to 62.7 percent in September from 62.8 in August, hitting its lowest level since February of 1978.

Paul Dales, Senior U.S. Economist at Capital Economics, said, "The chances of the cyclical rebound in the participation rate that the Fed expects appear to be receding."

"At some point, the Fed may have to conclude that the unemployment rate is a reasonably accurate measure of the amount of slack," he added. "That said, it's odd that the tighter labor market has yet to generate any wage pressure."

A separate report from the Commerce Department showed that the U.S. trade deficit unexpectedly narrowed in August, while the Institute for Supply Management reported a modest slowdown in the pace of growth in the service sector in September.

Sector News

Airline stocks continue to turn in some of the market's best performances, regaining some ground following a recent sell-off. The NYSE Arca Airline Index has surged up by 2.9 percent, climbing further off Wednesday's five-month closing low.

JetBlue (JBLU), American Airlines (AAL), and United Continental (UAL) are posting standout gains in mid-day trading.

Significant strength has also emerged among biotechnology stocks, as reflected by the 1.9 percent gain being posted by the NYSE Arca Biotechnology Index. Alexion Pharmaceuticals (ALXN) and Exact Sciences (EXAS) are posting notable gains.

Most of the other major sectors have also moved to the upside, with considerable strength visible among railroad, healthcare, internet, and banking stocks.

On the other hand, gold stocks have moved sharply lower on the day, dragging the NYSE Arca Gold Bugs Index down by 4 percent. The weakness in the sector comes as gold for December delivery has tumbled $20.40 to $1,194.70 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday. Japan's Nikkei 225 Index rose by 0.3 percent, while Hong Kong's Hang Seng Index climbed by 0.6 percent. However, the markets in India, China and South Korea remained closed for public holidays.

The major European markets also moved to the upside on the day, although the German markets were closed for Unity Day. The U.K.'s FTSE 100 Index surged up by 1.3 percent, while the French CAC 40 Index jumped by 0.9 percent.

In the bond market, treasuries have climbed off their worst levels of the day but continue to see modest weakness. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 1.6 basis points at 2.454 percent.