An investor friendly jobs report led the benchmarks to close in the green on Friday, with the Nasdaq reaching an all-time high. Additionally, the Dow moved past the level of 25,000 again after Feb 28. Upbeat jobs data along with lower wage growth subdued inflationary concerns and reduced rate hike fears. All the key indexes not only ended in positive territory on Friday, but also registered weekly gains. The weekly rise came mainly after Trump signed proclamations on aluminum and steel imports, but exempted neighbors Canada and Mexico from these tariffs.
Additionally, the bull market is now nine years old, overcoming a plethora of challenges. This is the second largest bull-run in history after the 1990s rally that ended with the tech bubble burst in 2000. The rally came with five corrections (a decline of 10% or more); the last one witnessed in the beginning of February 2018.
How the Benchmarks Fared?
The Dow Jones Industrial Average (DJI) increased 1.8%, or 440.53 points, to close at 25,335.74. The S&P 500 rose 1.7% to close at 2,786.57. The tech-laden Nasdaq Composite Index closed at 7,560.81, gaining 1.8%. The fear-gauge CBOE Volatility Index (VIX) decreased 6.7% to close at 15.43. During the intraday trade the VIX reached its lowest level since Feb 1.
A total of 6.82 billion shares were traded on Friday, lower than the last 20-session average of 7.47 billion shares. Advancers outnumbered decliners on the NYSE by a 2.77-to-1 ratio. On Nasdaq, a 2.81-to-1 ratio favored advancing issues.
Weak Wage Growth Eased Inflation Fears
The U.S. economy added 313,000 jobs in February, significantly higher than the consensus estimate of 208,000 job additions. Moreover, a sharp upward revision of January’s job numbers indicated strong job additions were likely this year. The unemployment rate remained unchanged at 4.7% in February. However, average hourly wages rose only 0.1% in February, lower than January’s 0.3% increase. Average hourly earnings also rose 2.6% over the year.
After strong wage growth in January markets entered into correction territory last month. Disappointing wage growth and strong job additions in February thus, soothed inflation fears. Encouraging jobs report had a positive impact on the broader markets. The Financial Select Sector SPDR (XLF) climbed 2.5%, becoming the best performing sector among the S&P 500. Dow components, The Goldman Sachs Group, Inc. (GS - Free Report) and JPMorgan Chase & Co. (JPM - Free Report) rose 1.7% and 2.9%, respectively.
Additionally, the Industrial Select Sector SPDR (XLI) surged 2.2%, becoming the second biggest gainer sector among the S&P 500 sectors. Two of its key holdings, 3M Company (MMM - Free Report) and The Boeing Company (BA - Free Report) rose 2.1% and 1.7%, respectively. 3M has a Zacks Rank #2 (Buy), Boeing possess a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
All 3 Indexes Up More Than 3% For The Week
For the week, the Dow, the S&P 500 and the Nasdaq gained 3.3%, 3.5% and 4.2%, respectively.President Trump signed his tariff plan into law on Thursday, which will come into effect from Mar 23, 2018. Per this law, fresh levies of 25% on steel imports and 10% on aluminum imports will be imposed.
However, this tariff plan excludes countries like Canada and Mexico, offering Trump a chance to renegotiate terms of the North American Free Trade Agreement (NAFTA) with the two countries. Also, the United States wants to discuss national security issues with both these countries.
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