Market Wrap for July 5: Stocks, Oil, U.S. Dollar Jump in Wake of Strong Payrolls Report; Treasuries and Precious Metals Plunge

The U.S. stock market climbed on Friday and other markets gyrated violently in the wake of a very strong Nonfarm payrolls report for June.

Stocks actually fell in the early going after gapping higher, but significant buying pressure in afternoon trading sent the major averages out near session highs. The Dow Jones Industrial Average climbed nearly 150 points. Other asset classes that did well on the day included crude oil and the U.S. dollar.

Precious metals and Treasuries, however, were both crushed in the wake of the upbeat payrolls report. Although risk appetite was brisk in the equity market, sharp increases for interest rates and oil prices could quickly become cause for investor concern.

If current trends persist, higher interest rates and gas prices will become significant headwinds for the economy.

Major Averages

The Dow Jones Industrial Average rose 147 points, or 0.98 percent, to 15,136.

The S&P 500 climbed around 16 points, or 1.02 percent, to 1,632.

The Nasdaq jumped 36 points, or 1.04 percent, to 3,479.

Nonfarm Payrolls

The Nonfarm payrolls report for June showed that the economy added 195,000 jobs. This was identical to the increase in recorded in May. The figures came in well-ahead of consensus estimates, helping spur another rally in the equity market. Economists had expected payrolls to rise 166,000 for the month.

Private payrolls rose 202,000, which was less than the 207,000 jobs that were added in the month of May. This was also significantly ahead of consensus expectations which called for an increase of 180,000 in private Nonfarm payrolls.

Unemployment Rate

The unemployment rate for the month of June was 7.6 percent. This was unchanged compared to May, and in-line with consensus expectations.

Hourly Earnings and Average Workweek

Aggregate earnings last month rose 0.6 percent. This was primarily driven by a better than expected 0.4 percent increase in average hourly wages, which came in ahead of estimates calling for a rise of 0.2 percent.

The average workweek remained unchanged compared to the prior month at 34.5 hours. This was exactly what the consensus expected. The labor participation rate rose to 63.5 percent versus 63.4 percent previously. The one basis point rise in labor participation equals 177,000 new jobs in the month, a solid if not spectacular figure.

Commodities

The rally in stocks helped to drive oil prices higher on Friday. Crude oil is now trading firmly above $100 and higher prices may begin to be reflected in other economic indicators -- potentially becoming a headwind to growth.

Late in the day, NYMEX crude futures were up another 1.79 percent to $103.05. Brent contracts had jumped 1.76 percent to $107.40. Natural gas lost 2 percent on the session and was last trading at $3.62.

As money moved into equities, it came out of precious metals. It was another fairly bad day for the sector. Approaching the closing bell for stocks, COMEX gold futures had lost 3 percent to $1,214.50. Silver plunged nearly 5 percent to $18.77. Copper was also effected, with prices for the industrial metal losing well over 3 percent to $3.0720.

In the grains complex, both corn and wheat also fell. At last check, corn futures were down 2.29 percent while wheat had lost 0.75 percent. Movers in soft commodities included cocoa and sugar. Cocoa futures were down 1.17 percent while sugar had lost roughly 1 percent. Overall, it was a fairly quite day in soft commodities in terms of volatility.

Bonds

Bonds were crushed on the session, driving rates higher. The iShares Barclays 20+ Year Treasury Bond ETF (NYSE:TLT) hit a new 52-week low and was last down 3.16 percent to $106.53.

Yields on Treasuries late on Friday were as follows. The 2-Year Note was yielding 0.39 percent. Over the last month, the yield on this short-term benchmark financial instrument has risen eleven basis points alone. The 5-Year Note yield was up to 1.60 percent. The 10-Year note and 30-Year Bond yields moved aggressively higher to 2.72 percent and 3.67 percent. The yield on the 10-Year has now surged better than 1 percent over the last year.

Currencies

On the back of the strong payrolls report, the U.S. Dollar soared on Friday. At last check, the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback versus a basket of foreign currencies, had jumped 1.46 percent to $22.90.

The closely watched EUR/USD pair was last down 0.67 percent to $1.2831. The USD/JPY surged 1.22 percent on the session and the GBP/USD lost 1.15 percent. The other significant mover on the day was the AUD/USD, with the Aussie dollar registering a decline of 0.83 percent versus the greenback.

Volatility and Volume

The VIX fell on Friday in response to the rally in equities. The widely watched barometer of volatility expectations was last down 5.43 percent to 15.32.

Volume was lighter than normal in the stock market despite significant price movements across asset classes on Friday. Only around 119.6 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands compared to a 3-month daily average of 144.4 million.

Stock Movers

Celldex Therapeutics (NASDAQ:CLDX) was among the day's leaders after the company initiated a pilot study of CDX-1135 for the treatment of dense deposit disease (DDD). The stock was last up 14 percent near the close of trade.

A rally in solar shares sent SunPower (NASDAQ:SPWR) to new 52-week highs on Friday. The rally in the solar sector was helped by reports that the European Union and China are close to reaching a deal to cap annual solar panel exports.

First Bancorp (NYSE:FBP), the holding company for FirstBank Puerto Rico, added more than 8 percent on Friday. Although the reason for the activity in the stock was not immediately clear, FirstBancorp was upgraded at Sterne Agee last month and initiated with a Buy rating at Guggenheim Partners a couple of weeks ago.

Shares of Stratasys (NASDAQ:SSYS) climbed roughly 8 percent on the session. The 3D printing giant recently announced a $403 million acquisition of MakerBot.

Dell (NASDAQ:DELL) shed around 2 percent on the day after reports indicated that founder Michael Dell and private-equity giant Silver Lake won't be increasing their $24.4 billion offer for the company. Shareholder advisory firms Institutional Shareholder Services and Glass, Lewis & Co. are expected to issue their recommendations on the value proposition of the deal any day now.

Home-builders were hit very hard on Friday in the wake of soaring long-term Treasury yields, which will push up mortgage rates. Losers included Ryland Group (NYSE:RYL), Meritage Homes (NYSE:MTH), and Lennar (NYSE:LEN). Losses ranged from 4 percent to slightly under 6 percent for the three stocks.

Precious metals mining companies also saw losses on the day. Among the prominent names falling on the session were Barrick Gold (NYSE:ABX), which lost more than 6 percent, and Newmont Mining (NYSE:NEM), which shed over 4 percent.

World Acceptance (NASDAQ:WRLD) plummeted around 12 percent on Friday after the company said on Wednesday that it was unable to file certain portions of its 10-K with the SEC because of unexpected delays in completing its financial statements. The delay is related to additional review and analysis need to support the company's allowance for loan losses.