Stocks got another boost on Friday, after the February non-farm payrolls report beat expectations.
The Department of Labor’s Bureau of Labor Statistics reported that 175,000 new non-farm payroll jobs were created in February, beating economists’ expectations to see that 125,000 – 150,000 new jobs were added. The news sent stocks higher, with the S&P 500 hitting new record intraday and closing highs.
The BLS report indicated that during February, the unemployment rate ticked higher from 6.6 percent to 6.7 percent, moving away from the Federal Reserve’s threshold for reassessing its forward guidance about raising the federal funds rate. On the other hand, New York Fed President Bill Dudley tipped his hand on Friday afternoon, indicating that the Fed will likely raise the federal funds rate from its current 0 – 0.25 percent range at some point in mid-2015.
The Dow Jones Industrial Average (DIA) picked up 30 points to finish Friday’s trading session at 16,452 for a 0.19 percent advance. The S&P 500 (SPY) rose 0.05 percent to a record-high close at 1,878.04 after hitting a record intraday high of 1,883.57.
The Nasdaq 100 (NASDAQ:QQQ) declined 0.47 percent to finish at 3,703. The Russell 2000 (IWM) dipped 0.10 percent to 1,203.
In other major markets, oil (USO) climbed 0.57 percent to close at $36.78.
On London’s ICE Futures Europe Exchange, May futures for Brent crude oil advanced 68 cents (0.63 percent) to $108.25/bbl. (BNO).
April gold futures declined $11.40 (0.84 percent) to $1,340.40 per ounce (GLD).
The transportation sector was zipping along at Warp 9 during Friday’s trading session, as the Dow Jones Transportation Average climbed 0.43 percent to a record-high close at 7,592.36 after hitting a record intraday high of 7,627.44 (IYT).
In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity. Japanese stocks soared as the yen weakened to 103.01 per dollar during the last hour of Friday’s trading session in Tokyo. A weaker yen causes Japanese exports to be more competitively priced in foreign markets (FXY). The Nikkei 225 Stock Average surged 0.92 percent to 15,274 (EWJ).
In China, stocks declined slightly as investors anxiously awaited Saturday’s release of the nation’s trade balance report. Investor anxiety was compounded by the fact that the People’s Bank of China allowed the first corporate bond default since it first began regulating the debt market in 1997. Shanghai Chaori Solar Energy was unable to make its $14 million interest payment on Thursday. The PBOC is taking the wise course of letting the company default, rather than the bailout route, which creates a “moral hazard” milieu and encourages financial recklessness by others.
The Shanghai Composite Index dipped 0.08 percent to 2,057 (FXI). Hong Kong’s Hang Seng Index declined 0.19 percent to 22,660 (EWH).
Ongoing tension over Russia’s plans for Crimea kept European investors in a risk-averse mood, as Friday’s stock selloff signaled widespread anxiety about holding long positions over the weekend. The Euro STOXX 50 Index finished Friday’s session with a 1.57 percent drop to 3,095 – remaining just above its 50-day moving average of 3,092. Its Relative Strength Index is 48.51 (FEZ).
Technical indicators revealed that the S&P 500 climbed further above its 50-day moving average of 1,826 on Friday, advancing 0.05 percent to reach a record-high close at 1,878.04 after hitting a record intraday high of 1,883.57. Its Relative Strength Index (RSI) rose from 66.14 to 66.40. The MACD and the signal line are both climbing above the zero line, suggesting that the S&P could continue its advance during the immediate future.
On Friday, five sectors advanced and four sectors declined. The materials sector took the hardest hit, falling 0.44 percent.
Consumer Discretionary (XLY): -0.15%
Technology: (XLK): -0.30%
Industrials (XLI): +0.32%
Materials: (XLB): -0.44%
Energy (XLE): +0.19%
Financials: (XLF): +0.45%
Utilities (XLU): +0.30%
Health Care: (XLV): -0.25%
Consumer Staples (XLP): +0.28%
Bottom line: February’s better-than-expected non-farm payrolls report sent the S&P 500 to new record intraday and closing highs on Friday.
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