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Stock Market News for February 4, 2013

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Encouraging non-farm payroll data boosted investor sentiment and lifted benchmarks higher on Friday. Positive sentiments were also fueled by encouraging reports on the manufacturing sector and construction spending. These factors combined to propel the blue-chip index to its highest level in more than five years. All ten sectors of the S&P 500 industry groups finished in the green with the financial sector emerging as the biggest gainer.

The Dow Jones Industrial Average (DJI) gained 1.1% to close the day at 14,009.79. The S&P 500 rose 1% to finish yesterday’s trading session at 1,513.17. The tech-laden Nasdaq Composite Index increased 1.2% to end at 3,179.10. The fear-gauge CBOE Volatility Index (VIX) decreased 9.7% to settle at 12.90. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.35 billion shares, lower than the daily average of 6.45 billion shares in 2012. Advancing stocks outnumbered the decliners on the NYSE. For 74% stocks that advanced, 23% declined.

Jobs data provided investors with much needed respite. Following weak initial claims data and a disappointing GDP report last week, sentiments were quite low. But jobs data released on Friday helped the S&P 500 finish in the green for the fifth consecutive week. The index is only 60 points behind its highest intraday level of 1,576.09. The Dow finished its trading session on Friday above the 14,000 mark for the first time in five years and is 1.1% below its highest level achieved in October 2007.

Meanwhile, the U.S. Bureau of Labor Statistics reported that non-farm payroll employments rose by 157,000 in the month of January. This was slightly below the consensus estimate of 158,000. According to the report, the increase in January non-farm payroll employments was boosted by positive contributions from retail trade, construction and health care. However, the unemployment rate increased marginally by 0.1% to 7.9%. The Labor Department also said 127,000 more jobs were added in November and December than initially reported.

The manufacturing sector also added to positive investor sentiment on Friday. According to the Institute of Supply Management, the PMI stood at 53.1%, up 2.9% from December’s data beating the consensus estimate of 50.4. The main growth drivers among this index were new orders, production and employment. New orders grew 3.6% to 53.3, production rose 1% to 53.6 while the employment index increased 2.1% to 54.0. The U.S. manufacturing index was at a nine-month high.

According to the U.S. Department of Commerce, construction spending increased 0.9% to $885.0 billion in December versus $876.9 billion in November. On an annual basis in 2012, construction spending was $850.2 billion compared with $778.2 billion spent in 2011. Private construction spending rose 2.0% to $614.9 billion. Public construction spending increased 1.4% to $270.1 billion.

Among earnings results, shares of Perrigo Company (NASDAQ:PRGO) surged 4.8% after the company’s second quarter earnings beat the Street’s expectations. According to Thomson Reuter’s data, 252 S&P 500 companies have posted their earnings, among which 69% of them have reported earnings above the Street’s expectations.

The financial sector was the biggest gainer among the S&P 500 industry groups and the Financial Select Sector SPDR (XLF) gained 1.3%. Stocks such as Bank of America Corp (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), Goldman Sachs Group, Inc. (NYSE:GS), Citigroup Inc. (NYSE:C) and State Street Corporation (NYSE:STT) increased 3.5%, 1.7%, 1.4%, 2.0% and 1.3%, respectively.

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