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 Nonfarm payrolls added 113,000 jobs in January — well shy of the
forecast for 185,000. December payrolls were revised upward by only
1,000 to 75,000. The U.S. unemployment rate in January hit a
five-year low of 6.6 percent, slightly above the 6.5 percent level
that Fed officials have said would prompt them to consider raising
benchmark interest rates from near zero.
The rapid drop in U.S. unemployment will make re-crafting the
Federal Reserve's easy-money promise a top priority for new Chair
Janet Yellen, who will probably avoid tying policy to specific
targets in the labor market.
Strong job gains in construction hinted that cold weather was
probably not a major factor in January job creation. Traders
appeared to expect that the January numbers will be revised upward
next month. The data also showed job gains in manufacturing.
"The BLS can tell us there was no abnormal weather in this January
number, but I've been freezing for two months. I can't believe there
was no weather impact to this number," said Phil Orlando, chief
equity market strategist at Federated Investors, in New York.
"So intellectually I am sort of discounting that, and saying I'm
going to give the employment report a hall pass until we get into
the spring."
Concern about recent soft U.S. data added to worries about growth in
China and a selloff in emerging market currencies and equities to
push stocks sharply lower worldwide in the past few weeks.
Near-term concerns have subsided, however, and the spot price for
protection against drops in the S&P 500 is again below front-month
contracts, following a brief inversion of that curve. The CBOE
Volatility Index <.VIX> fell 11.3 percent to end at 15.29 on Friday
after trading above 21 earlier this week. One-month VIX futures slid
9 percent to 15.47.
As investors await a batch of fresh data in the coming month,
previous expectations for sustained U.S. economic growth are still
supporting stock prices.
The S&P 500 closed above its 14-day moving average, a level it
hadn't traded above since January 23. The 2.6 percent gain for the
past two sessions marked the S&P 500's best two-day performance in
four months.
The Dow Jones industrial average <.DJI> shot up 165.55 points or
1.06 percent, to end at 15,794.08. The S&P 500 <.SPX> gained 23.59
points or 1.33 percent, to close at 1,797.02. The Nasdaq Composite
<.IXIC> added 68.739 points or 1.69 percent, to finish at 4,125.861.
For the week, the Dow rose 0.6 percent, the S&P 500 gained 0.8
percent and the Nasdaq advanced 0.5 percent.
The S&P 500 fell as much as 6 percent this week from a record
closing high set on January 15. Before Friday's gains, the benchmark
index was facing its fourth weekly decline in a row — a losing
streak not seen since July and August in 2011. "I'm willing to give the market the benefit of the doubt,
particularly with the prices 6 percent lower than they were three
weeks ago," Orlando said.
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The tech sector got a lift from Apple Inc <AAPL.O> after the iPhone
maker said it bought $12 billion worth of stock via an accelerated
buyback program and $2 billion more from the open market in the two
weeks since it reported earnings. Apple's stock gained 1.4 percent
to close at $519.68.
News Corp <NWSA.O> Class A shares jumped 8.7 percent to end at
$17.41 a day after the publisher of the Wall Street Journal said
cost cuts helped push its profit well above analysts' forecasts.
The stock of online travel agency Expedia <EXPE.O> soared 14.3
percent to $74.45, making it the S&P 500's best performer a day
after the company posted a higher-than-expected quarterly profit.
Shares of rival Priceline.com <PCLN.O> added 5 percent to close at
$1,195.39. Orbitz Worldwide <OWW.N> gained 4.2 percent to $7.43 and
TripAdvisor <TRIP.O> jumped 9.5 percent to $84.45.
Thomson Reuters data showed that of the 343 companies in the S&P 500
that had reported earnings through Friday morning, 67.9 percent have
topped Wall Street's expectations, slightly above the 67 percent
beat rate for the past four quarters and ahead of the 63 percent
rate since 1994.
Bucking Friday's upward trend, shares of LinkedIn <LNKD.N> fell 6.2
percent to $209.59 after the online network for professionals gave
revenue forecasts that were below those of analysts.
Shares of Fairway Group Holdings Corp <FWM.O> lost 29 percent to
close at $8.12 a day after the upscale grocery store chain posted
quarterly results and announced changes in management.
Volume was light, with about 6.09 billion shares traded on U.S.
exchanges, below the 6.94 billion average in January, according to
data from BATS Global Markets.
Advancing stocks outnumbered declining ones on the New York Stock
Exchange by a ratio of more than 3 to 1. On the Nasdaq, more than
two stocks rose for every one that fell.
(Editing by Jan Paschal)
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