Benchmarks bolstered gains after encouraging employment numbers offset weak domestic reports. Meanwhile, the Dow Jones and S&P 500 touched all-time highs during Friday’s trading session. On the international front, the European Commission said that France, one of the Euro Zone’s largest economies, has “slipped back into recession” and might take a couple of years to curb its deficit budget. Energy stocks emerged as the biggest gainer among the top ten S&P 500 industry groups, while utilities were the only losers.
The Dow Jones Industrial Average (DJI) increased 1.0% to close the day at 14,972.19. The S&P 500 gained 1% to finish Friday’s trading session at 1,614.22. The tech-laden Nasdaq Composite Index rose 1.1% to end at 3,378.63. The fear-gauge CBOE Volatility Index (VIX) lost 5.5% to settle at 12.85. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.33 billion shares, marginally below 2013’s average of 6.36 billion shares. Advancing stocks outnumbered the decliners. For the 70% that advanced, 27% declined.
The Dow and the S&P 500 closed at all-time highs on Friday, leveraged by positive investor sentiment owing to unexpected encouraging employment numbers. The S&P 500 closed above the 6,000 level and the Dow Jones, breached the 15,000 level for the first time for a short period. Last week, the Dow, the S&P 500 and the Nasdaq gained 1.8%, 2% and 3%, respectively.
Major indices chalked up gains of over 1% after a report indicted an improving employment scenario. According to the U.S. Department of Labor, nonfarm payroll employment came in at 165,000 compared to a consensus estimate of 145,000 and well above previous month’s figure of 88,000. The unemployment rate came in at 7.5% compared to a consensus estimate of 7.6%. This encouraging data came in on Friday after a string of disappointing domestic reports which included a drop in the manufacturing index and employment figures released by ADP. In spite of an encouraging unemployment rate, it is still below the level set by the Federal Reserve. The Fed is expected to withdraw monetary stimulus after the target rate is achieved.
According to a report released by the Institute of Supply Management, the Non-Manufacturing ISM (NMI) for April was reported at 53.1%, below the consensus estimate of 53.7%. The business activity index, new orders index and employment index were recorded at 55%, 54.5% and 52% respectively. According to the U.S. Department of Commerce, new orders for manufactured goods in March dropped 4% below the consensus estimate of a decrease of 2.5% and well below February’s increase of 1.9%. Shipments and unfilled orders decreased 1% and 0.7% while inventories increased marginally.
According to the European Commission, the Euro Zone economy is expected to decline by 0.4%, higher than the earlier forecast of 0.3%. France slipped into recession with GDP contracting 0.1% for the first quarter of 2013. However, the French government is optimistic that the nation will return to its growth path. The European Commission also said the budget deficit of France might touch 4.2% in the forthcoming year if current policies remain unchanged. Presently, the budget deficit of France is 3.9%. France will take two years to curb the budget deficit, the commission added.
On the earnings front, LinkedIn Corp. (NYSE:LNKD) plunged 13% in spite of reporting better-than-expected earnings. Shares dropped in light of the weak guidance provided by the company. For the second quarter of 2013, the company is expected to report revenues between $342 million and $347 million, below analyst expectations of $359 million.
Of the top ten S&P 500 industry groups, energy stocks gained the most. The Energy Select Sector SPDR (XLE) moved up 1.8%. Stocks such as Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), Hess Corp. (NYSE:HES), Occidental Petroleum Corporation (NYSE:OXY) and Marathon Petroleum Corp (NYSE:MPC) gained 1.6%, 1.2%, 1.1%, 3% and 3%, respectively.
Utilities shares were the only loser among the top ten S&P 500 industry groups. The Utilities SPDR (XLU) lost 0.2%. Shares such as Duke Energy Corp (NYSE:DUK), Dominion Resources, Inc. (NYSE:D), Xcel Energy Inc. (NYSE:XEL), American Electric Power Company, Inc. (NYSE:AEP) and PPL Corporation (NYSE:PPL) declined 0.4%, 0.3%, 0.5%, 0.2% and 0.6%, respectively.