Sector Investing

[ReturntoSender]

Wall Street rallies on modest jobs growth to end week on positive note
04-Oct-19 16:15 ET
Dow +372.68 at 26573.72, Nasdaq +110.21 at 7982.48, S&P +41.38 at 2952.05

https://www.briefing.com/stock-market-update

[BRIEFING.COM] The S&P 500 rose 1.4% on Friday, with buying momentum picking up after the release of the Employment Situation Report for September and continuing throughout the day. It was a broad-based rally, led by shares of financial and technology companies, although trading volume was lighter than usual.

The Dow Jones Industrial Average (+1.4%) and Nasdaq Composite (+1.4%) kept pace with the benchmark index, followed by the Russell 2000 (+1.0%).

The U.S. economy added 136,000 jobs to nonfarm payrolls in September, which was slightly below expectations (Briefing.com consensus 150,000) but also better than expected when accounting for the upward revisions in August and July. The unemployment rate hit a 50-year low at 3.5% (Briefing.com consensus 3.7%), while average hourly earnings were unchanged (Briefing.com consensus 0.3%).

Some pointed to no wage growth as a disappointment, but the modest jobs growth helped subdue this week's general growth concerns. Fed Chair Powell also repeated his view that the U.S. economy is "in a good place." The general sense of relief in the market helped the S&P 500 close above its 50-day moving average (2942).

All 11 S&P 500 sectors finished higher. Eight sectors finished up at least 1.0%, including noticeable gains in the financials (+1.9%) and information technology (+1.7%) sectors. Apple (AAPL 227.01, +6.19, +2.8%) carried the tech sector higher after the Nikkei Asian Review reported the company asked suppliers to increase production for the iPhone 11 by up to 10%.

HP (HPQ 16.64, -1.76, -9.6%) was left out of today's rally. The company announced it will reduce its global headcount by 7,000 to 9,000 employees as part of a restructuring plan. HP also authorized a $5 billion share repurchase program and raised its dividend by 10%.

U.S. Treasuries finished little changed despite the bullish bias in equities. The 2-yr yield increased one basis point to 1.39%, while the 10-yr yield declined basis points to 1.52%. The U.S. Dollar Index finished little changed at 99.80. WTI crude rose 0.6%, or $0.30, to $52.78/bbl.

Reviewing Friday's economic data, which featured the Employment Situation Report for September and included the Trade Balance report for August:

September nonfarm payrolls were roughly in-line with expectations, but actually better than expected when accounting for the upward revision to nonfarm payrolls for August and July. September nonfarm payrolls increased by 136,000 (Briefing.com consensus 150,000). The unemployment rate dropped to 3.5%, which is the lowest since December 1969.
One key takeaway is that the 50-year low unemployment rate will play well politically in the present for the current administration. Another key takeaway, though, is that the average hourly earnings growth (actually, there was none) won't play so well economically.
The trade deficit for August widened to $54.9 billion (Briefing.com consensus -$54.4 billion) from -$54.0 billion in July, as exports were $0.5 billion more than July exports while imports were $1.3 billion more than July imports.
The key takeaway from the report is the understanding that trade continues to drag on GDP growth, evidenced by the average third quarter real trade deficit being 0.8% above the second quarter average.

Looking ahead, investors will receive the Consumer Credit report for August on Monday.

Nasdaq Composite +20.3% YTD
S&P 500 +17.8% YTD
Dow Jones Industrial Average +13.9% YTD
Russell 2000 +11.3% YTD

Market Snapshot
Dow 26573.72 +372.68 (1.42%)
Nasdaq 7982.48 +110.21 (1.40%)
SP 500 2952.05 +41.38 (1.42%)
10-yr Note +24/32 1.515
NYSE Adv 2098 Dec 723 Vol 720.3 mln
Nasdaq Adv 2071 Dec 991 Vol 1.7 bln

Industry Watch
Strong: Financials, Information Technology
Weak: Materials

Moving the Market

-- Stock market ends week on positive note, rallies following decent employment

-- U.S. added 136,000 nonfarm payrolls to the economy; unemployment rate hit 50-year low at 3.5%; earnings growth was unchanged

-- Strength in Apple (AAPL) and its suppliers on news Apple asked to increase production for the iPhone 11 by up to 10%

-- Relatively light trading volume