Stock Market News for August 6, 2012 - Market News
August 06 2012 - 5:06AM
Zacks
A strong nonfarm payroll report
helped benchmarks snap their four-day losing streak on Friday. More
importantly, strategists believed that better-than-expected jobs
data did not completely rule out chances of further economic
stimulus from the central bank. The Dow had its best day since June
29, while the S&P 500 was at its highest level since May.
Friday’s gains also ensured that benchmarks finished in the green
for the week; despite registering only paltry gains.
The Dow Jones Industrial Average
(DJI) gained 217.29 points or 1.7% and ended at 13,096.17. The
Standard & Poor 500 (S&P 500) jumped 1.9% to finish
Friday’s trading session at 1,390.99. The tech-laden Nasdaq
Composite Index surged a robust 2% to close 58.13 points higher at
2,967.90. The fear-gauge CBOE Volatility Index (VIX) slumped almost
11% to settle at 15.64, reflecting easing investor fears.
Consolidated volumes on the New York Stock Exchange, NYSE and
Nasdaq was 6.8 billion shares. Advancing stocks were far ahead of
decliners. For 80% of stocks that gained, 17% stocks closed in the
red.
The Dow registered its best one-day
performance since late June, rebounding to the psychological 13,
000 level. This level is a key indicator for the markets as it
boosts investor confidence. Further, Friday’s gains helped the Dow
close in the green for the week.
For the blue-chip index, Verizon
Communications Inc. (NYSE:VZ) was the only stock among the 30 Dow
components that ended in negative territory, dropping 0.4%, while
McDonald's Corp. (NYSE:MCD) ended flat. Among the remaining 28
components, Alcoa, Inc. (NYSE:AA), Bank of America Corporation
(NYSE:BAC), Cisco Systems, Inc. (NASDAQ:CSCO), General Electric
Company (NYSE:GE), Hewlett-Packard Company (NYSE:HPQ), Kraft Foods
Inc. (NASDAQ:KFT), Procter & Gamble Co. (NYSE:PG), United
Technologies Corp. (NYSE:UTX) led the gains moving up 2.3%, 3.5%,
3.9%, 2.1%, 4.1%, 4.0%, 3.1% and 3.2%, respectively.
During the earlier part of last
week, investors adopted a wait and watch stance as the Federal Open
Market Committee held the crucial two-day meet. However, the
meeting concluded with no announcements on quantitative easing. The
disappointment was intensified a day later when European Central
Bank President Mario Draghi failed to live up to his pledge of
doing “whatever it takes” to preserve the Euro-zone. While these
key events dampened investor sentiment, nonfarm payroll data easily
reversed the markets’ losing streak.
The U.S. Bureau of Labor Statistics
announced that total nonfarm payroll employment jumped 163,000 in
July. This was a significant jump from the addition of 64, 000 jobs
in June (revised downwards from the original level of 80, 000). The
figure was also clearly ahead of consensus estimates that projected
the addition of 99, 000 jobs. Professional and business services,
food services and drinking places, and manufacturing reported
higher employment. Professional and business services employment
jumped 49,000 while employment in food services and drinking places
and manufacturing were up by 29, 000 and 25, 000, respectively, in
July.
Investors received much needed
relief from better-than-expected nonfarm payroll data.
Incidentally, the robust jobs data has not affected the prospects
of the third round of bond buyback by the government. The central
bank has suggested that their eyes are on the jobs number which one
of the prime criteria about the necessity of economic measure.
However, the general sentiment is that the rise in the unemployment
rate to 8.3% from 8.2% has kept the door open for the central bank
to decide on a third round of quantitative easing.
Separately, the Institute for
Supply Management released its data about economic activity in the
non-manufacturing sector. According to the report: “The NMI
registered 52.6 percent in July, 0.5 percentage point higher than
the 52.1 percent registered in June. This indicates continued
growth this month at a slighter faster rate in the
non-manufacturing sector”. This is marginally higher than consensus
estimates of a reading of 52.2.
Nonfarm payroll data was not only
responsible for Friday’s gains, but also helped benchmarks close in
the green for the week. The Dow, S&P 500 and Nasdaq ended the
week with gains of 0.2%, 0.4% and 0.3%, respectively. The Dow
notched up a record in this regard too, enjoying its longest weekly
stretch of gains this year.
ALCOA INC (AA): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis Report
CISCO SYSTEMS (CSCO): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
KRAFT FOODS INC (KFT): Free Stock Analysis Report
MCDONALDS CORP (MCD): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis Report
UTD TECHS CORP (UTX): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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