USB US Bancorp

Markets ended modestly higher on Friday buoyed by positive data on the jobs market. On the third anniversary of the stocks’ lowest point during the Great recession, investors drew optimism from reports of an improving economy. However, benchmarks came down from morning highs as a concerns over “credit event” in Greece somewhat weighed on sentiments. Alongside, the week saw the benchmarks’ worst fall of 2012, but that did not stop the majority of benchmarks from closing in the green.

The Dow Jones Industrial Average (DJI) ended 0.1% higher at 12,922.02. The Standard & Poor 500 (S&P 500) moved up to 1,370.87, registering gains of 0.4%. The tech-laden Nasdaq Composite Index jumped 0.6% and finished Friday’s trading session at 2,988.34. The fear-gauge CBOE Volatility Index (VIX) lost 4.7% and settled at 17.11. On a year-over-year basis, VIX has now declined significantly, by 26.9% and is gradually reaching its lowest level since July 2011. The advancers were way ahead of the decliners on the New York Stock Exchange, as for 67% of the advancers, 29% stocks were on the declining side. The remaining 4% of stocks were left unchanged. Total volume on the NYSE was 3.64 billion shares.

The week had opened with apprehensions surrounding the Greek bond-swap deal. European concerns also dragged the benchmarks to their biggest fall for this year on Tuesday. However, since Wednesday things turned around following encouraging jobs data from ADP. Also buoying the markets on Thursday was news that a large number of investors had agreed to participate in the bond-swap plan. The positive mood continued into Friday, as nonfarm payroll data suggested an improving economy. The Dow edged down 0.4% for the week, but that is still a great improvement after the blue-chip index slumped over 200 points on Tuesday. The S&P 500 and Nasdaq closed 0.1% and 0.4% higher for the week, registering their fourth-straight week of gains.

On Friday, investors drew optimism from what the U.S. Bureau of Labor Statistics had to share. Nonfarm payroll employment was reported to have increased by 227,000 in February, while the unemployment rate remained flat at 8.3%. The increase in jobs was also more-than-expected as consensus estimates had predicted gains of 211,000. The report also stated: “Both the labor force and employment rose in February. The civilian labor force participation rate, at 63.9 percent, and the employment-population ratio, at 58.6 percent, edged up over the month”.

Improving jobs data provided a boost to stocks and nine of the 10 industry groups in the S&P 500 finished in the green. Among them, financials and consumers enjoyed most of the gains. The Financial SPDR Select Sector Fund (XLF) gained 0.8% and the Consumer SPDR Select Sector Fund (XLY) was up 0.6%. As for the financial bellwethers, American Express Company (NYSE:AXP), Citigroup, Inc. (NYSE:C), JP Morgan Chase & Co. (NYSE:JPM), Morgan Stanley (NYSE:MS), Wells Fargo & Company (NYSE:WFC), U.S. Bancorp (NYSE:USB) gained 0.5%, 0.6%, 1.5%, 1.1%, 0.8% and 1.9%, respectively. Coming to consumer stocks, Macy's Inc (NYSE:M), Target Corporation (NYSE:TGT), Wal-Mart Stores, Inc. (NYSE:WMT) and Lowe's Companies, Inc. (NYSE:LOW) gained 0.9%, 0.8%, 0.5% and 1.4%, respectively.

However, markets lost some points at a later stage as concerns from Greece somewhat bogged down sentiment. The odds of Greece avoiding a debt default had definitely improved through the week. The nation has convinced a large number of creditors to shoulder its debt burden and reportedly 75% of investors were in favor of the deal, while a CNBC report quoted a Greek official stating that ‘voluntary take-up of the offer’ escalated to roughly 95%. However, along with the improving odds also came the concerns about a “credit event”, which spooked investors and benchmarks lost some shine at the later hours. The International Swaps and Derivatives Association reported that a "credit event" enables creditors to claim insurance for their credit-default swaps. Thus, investors were worried that the financial houses may have to pay the insurance amount, leading to a selling pressure on the markets.

 

 
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