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Stock Market News For May 6, 2019

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Wall Street closed sharply higher on Friday, reversing the two previous session’s losses following the release of strong labor market data. All three major stock indexes finished in the green. However, for the week as a whole, both the S&P 500 and Nasdaq Composite ended in positive territory while the Dow suffered a loss.

The Dow Jones Industrial Average (DJI) increased 0.8% or 197.16 points, to close at 26,504.95. The S&P 500 gained 1% to close at 2,945.64. The Nasdaq Composite Index closed at 8,164, climbing 1.6% or 127.22 points. The fear-gauge CBOE Volatility Index (VIX) decreased 10.8% to close at 12.87. A total of 6.47 billion shares were traded on Friday, lower than the last 20-session average of 6.62 billion.Advancers outnumbered decliners on the NYSE by a 3.77-to-1 ratio. On Nasdaq, a 3.85-to-1 ratio favored advancing issues.

How Did The Benchmarks Perform?

The Dow finished in the green reversing its two-day losing streak with 28 stocks of the 30-stock blue-chip index finishing in the green while two ended in green. The S&P 500 also closed the day with gains. The Industrials Select Sector SPDR (XLI), Consumer Discretionary Select Sector SPDR (XLY) and Communication Services Select Sector SPDR (XLC) gained 1.2%, 1.2% and 1%, respectively. Notably, all eleven sectors of the benchmark index closed in positive territory.

The tech-laden Nasdaq Composite reversed its 3-day losing streak to record a new all time high close. Nasdaq’s rally, to a large extent, was led by strong performance by Amazon.com Inc. (AMZN - Free Report) . Shares of Amazon soared 3.2% after CNBC reported that Warren Buffett’s Berkshire Hathaway Inc. (BRK.B - Free Report) has bought shares of the e-commerce giant for the first time.

Moreover, shares of Tesla Inc. (TSLA - Free Report) surged 4.5% after the electric car maker raised the size of stock and bond offering from $2.3 billion to $2.7 billion.

Amazon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Robust Labor Market Data

On May 3, the Department of Labor reported that the U.S. economy added 263,000 jobs in April, significantly higher than the consensus estimate of 189,000. Professional and business services, construction, health care and financials added 76,000, 33,000, 27,000 and 12,000 jobs, respectively. However, retail sector witnessed a loss of 12,000 jobs.

The Department of Labor revised March’s job additions downward to 189,000 from 196,000. However, February’s data was revised upward from 33,000 to 56,000. Year to date, job gains came in at an impressive 205,000 on an average per month.  

Unemployment fell to 3.6% compared with the consensus estimate of 3.8%. This marks the lowest level of unemployment rate since December 1969. The number of unemployed people decreased 387,000 in April to stand at 5.8 million. The real unemployment rate, which includes those who have quit looking for better jobs as well as the underemployed, remained flat at 7.3% since February.

Average hourly wage rate increased 0.2% or 6 cents to $27.77. However, the metric fell below the consensus estimate of an increase of 0.3%. Year over year, average hourly wage gains remained flat at 3.2%.  The average work week also decreased 0.1 hours to 34.4 hours.

Other Economic Data

The Institute of Management’s (ISM) services index decreased to 55.5 in April from 56.1 in March, marking its lowest reading since August 2017. The consensus estimate was 57.3. The sub-indexes for new orders, employment, prices and backlogs, all declined in April.

Weekly Roundup

It was a mixed week in Wall Street. Both the S&P 500 and Nasdaq Composite gained 0.2%, while the Dow shaded 0.1%. A likely solution to the United States – China trade spat and strong labor market data strengthened investor’s confidence. However, weak ISM manufacturing and services data dampened market sentiment to some extent.

Moreover, the Fed kept benchmark lending rate unchanged, which resulted in volatile trading for couple of days as most investors were expecting a rate cut due to muted inflation.

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