Closing Summary - Stock Market Rallies Around Jobs Data A solid November employment report translated into a solid day of gains for the major averages. While there was some talk that the encouraging job growth raised the odds of the Fed announcing a tapering at its December meeting, the message of the markets today was either that it didn't believe there would be a tapering this month or that it doesn't fear a tapering this month.
It was just one day, yet there was ample meaning wrapped up in the connection that the 10-yr Treasury note (+3/32, 2.87%) and the stock market both pushed higher. Gold prices and the US Dollar Index, meanwhile, were little changed.
The headlines for the employment data were reassuring on just about every front. • Nonfarm payrolls increased by 203,000 (consensus 188,000) and were revised up for September (to 175,000 from 163,000) and down slightly for October (to 200,000 from 204,000) • Nonfarm private payrolls increased by 196,000 (consensus 200,000) • The unemployment rate fell to 7.0% from 7.3% • Average hourly earnings increased by 0.2% (consensus 0.2%) while aggregate earnings increased 0.6% (a good portent for consumer spending) • The average workweek edged up 0.1 to 34.5 hours (consensus 34.5) and factory overtime increased 0.1 to 3.5 hours The employment report drowned out the Personal Income and Personal Spending report for October, which was released at the same time. That report was mixed with personal income declining 0.1% (consensus 0.3%) and personal spending rising 0.3% (consensus 0.3%).
There was nothing mixed, however, about the stock market action. It was decidedly positive throughout the day and featured broad-based participation that saw every S&P sector finish higher, every Dow component finish higher, and all major indices gain at least 0.7%.
Remarkably, the S&P 500 made up almost the entirety of the ground it lost in its five-session losing streak and came within a whisker of ending higher for the ninth straight week. The consumer staples (+1.5%), industrials (+1.5%), financial (+1.4%), materials (+1.4%), and health care sectors (+1.4%) led today's winners. The energy sector, which gained 0.5%, was the weakest performer -- but it wasn't weak.
Weak areas were few and far between today. A number of retailers, though, were caught in the selling crosshairs after issuing disappointing guidance. Big Lots (BIG 32.50, -4.63), American Eagle Outfitters (AEO 14.85, -1.55), and Five Below (FIVE 45.30, -2.45) were such offenders. J.C. Penney (JCP 8.09, -0.76), meanwhile, got hit hit hard after a 10Q filing revealed an SEC request for information regarding the company's liquidity, cash position, and debt and equity financing.
Another area of notable weakness was the CBOE Volatility Index (VIX 13.84, -1.24). It dropped 8.2% as portfolio protection bets were taken off in the risk-on advance.
Today's gains came on lighter-than-expected volume. To that point, NYSE volume totaled 671 mln shares versus 700 mln on Thursday. • Nasdaq +34.5% YTD • Russell 2000 +32.9% YTD • S&P 500 +26.6% YTD • DJIA +22.1% YTD