Stocks Add to Gains as Energy, Materials Gain
Stocks added to strong gains, buoyed by news of surprisingly strong job gains in April.
The Dow Jones Industrial Average rose more than 150 points, reversing Thursday's price action, when the blue-chip index sank about 139 pointsamid a broad sell-off in commodities.
Kraft was among Dow stocks that led the average higher thanks to stronger-than-expected earnings results delivered after the market closed on Thursday, and price target upgrades by several brokerages.
The upbeat tone to the markets comes on the anniversary of the "Flash Crash," when the Dow plunged nearly 1,000 points in minutes.
TheS&P 500 and the Nasdaq also gained 1 percent. The CBOE Volatility Index, widely considered the best gauge of fear in the market, sank below 17.
All key S&P 500 sectors gained, led by energy and materials.
A 244,000 jump in nonfarm payrolls for April is great news for stocks, says Todd Schoenberger, managing director at LandColt Trading. The best part of the report was that private payrolls gained 268,000 in April, up from 231,000 in March, Schoenberger said.
"It's obvious these jobs are sticky, and not of the temporary, part-time variety," Schoenberger said.
The news is good for stocks because with monetary stimulus by the Federal Reserve ending in June, "you need to have earnings growth," he said. "And we’re seeing that. Now we have jobs growth."
The April report also counters dismal economic news released earlier in the week, including a weak report on service sector growth, as well as a big jump in initial claims for unemployment benefits. Although same store sales datafrom retailers showed relative strength on Thursday.
The markets also sank along with commodity prices earlier in the week, as the dollar gained. On Friday, those trends modestly reversed as the dollar traded flat against a basket of currencies.
Most commodity prices stabilized, including oil. U.S. light crude rose to nearly $102 a barrel after closing lower than $100 on Thursday, while buyers also returnedto silver and gold futures.
Earlier, European Central Bank President Jean-Claude Trichet said on CNBC that the commodity selloff would help to calm inflation, which he said was good news.
In other economic news, consumer credit is expected to fall to $4.9 billion in March from in $7.6 billion in February, a Briefing.com poll showed. The data will be released at 1 p.m.
On the earnings front, Visa shares rose slightly after initially slipping Thursday after the credit-card processing firm delivered earnings that failed to beat expectations by the wide margins investors were once used to. Wedbush and Susquehanna raised their price target for the Company.
And Alcatel-Lucent sank despite good earnings results as investors expressed concern the telecom equipment maker is too depend on sales from the U.S.
Engineering firm Fluor soared after beating estimates, and reporting a surging backlog of work.
Elsewhere, Citigroup gained after it was upgraded to "overweight" from "equal-weight" at Morgan Stanley, while JPMorgan also rose after news the investment firm did not have a single day of trading losses in the first quarter.
Shares of Warner Music Group gained after news Access Industries won an auction to take control of the company with a bid of $8.25 a share, Reuters reported, citing a person familiar with the matter. Shares were halted as news of the auction came out.
Sony gained after news CEO Howard Stringer apologized to users of its PlayStation Network for security breaches that compromised their identities. A group of hackers, meanwhile, said they are planning a third security breach of the network.
The jobs news in the U.S. also boosted shares in Europe, which ended higher.
On Tap Next Week:
MONDAY: Employment trends index, McDonald's April sales, Intel announcement, US/China strategic & economic dialogue, Citi reverse stock split takes effect; earnings from Activision Blizzard after-the-bell.
TUESDAY: NFIB small business index, import and export prices, wholesale trade, Richmond Fed president speaks, 3-year Treausry note auction; Google developers conference, CIT Group shareholder meeting; earnings from Dean Foods before-the-bell, and Disney after-the-bell.
WEDNESDAY: Weekly mortgage applications, international trade, oil inventories, Atlanta Fed president speaks, 10-year Treasury note auction, Cleveland Fed president speaks, Minneapolis Fed president speaks, Treasury budget, AIG IPO roadshow, Comcast shareholder meeting, Senate judiciary hearing on AT&T merger; earnings from Arcelor Mittal and Toyota before-the-bell, and Cisco and Symantec after-the-bell.
THURSDAY: PPI, retail sales, jobless claims, business inventories, 30-year Treasury bond auction, money supply, NPD video game sales, Ford shareholder meeting, options industry conference; earnings from Kohl's and Macy's before-the-bell, and Nordstrom after-the-bell.
FRIDAY: CPI, consumer sentiment; Transocean shareholder meeting.
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