Wall Street's Jobs Rally Loses Steam
FOX Business: The Power to Prosper
After touching 2007 levels earlier in the day, the blue chips trimmed their gains Friday afternoon and the Nasdaq Composite dipped into the red as traders continue to try to make sense of the surprise decline in the September unemployment rate.
Today's Markets
As of 2:43 p.m. ET, the Dow Jones Industrial Average jumped 32.83 points, or 0.25%, to 13609.07, the S&P 500 gained 1.40 points, or 0.10%, to 1462.82 and the Nasdaq Composite advanced lost 4.28 points, or 0.14%, to 3145.19. The FOX 50 slipped 0.02 points, or less than 0.01%, to 1103.35.
While the knee-jerk reaction has been mostly positive, many investors are also skeptical, looking under the hood of the September employment data and pointing to still-lackluster growth of nonfarm payrolls.
For now, the bulls seem to be winning that tug of war, leaving the S&P 500 on track for a five-day win streak and the blue chips on the cusp of their highest close in more than four-and-a-half years.
"These developments are exactly what the Federal Reserve is looking for in terms of a 'better' labor market," Dan Greenhaus, chief global strategist at BTIG, wrote in a note.
The vast majority of the Dow's 30 members advanced, led by economically-sensitive Home Depot (NYSE:HD) and Boeing (NYSE:BA). The index's laggards included Hewlett-Packard (NYSE:HPQ) and UnitedHealth (NYSE:UNH).
The Nasdaq Composite enjoyed lighter gains and even dipped into the red in recent action amid declines for juggernaut Apple (NASDAQ:AAPL) along with other tech stocks like eBay (NASDAQ:EBAY).
Prior to the labor figures, the markets received a bid from overseas as the Euro Stoxx 50 rallied about 1% amid optimism about Greek banks, boosting sentiment on Wall Street.
Yet the spotlight was squarely on the U.S. labor markets on Friday as stock futures hit session highs after the Labor Department released its monthly jobs report and the results of the household employment survey.
The data revealed a surprise plunge in the U.S. unemployment rate to 7.8% from 8.1%, leaving the gauge at its lowest level since January 2009 near the depths of the Great Recession. Economists had expected it to rise to 8.2%. The drop in the unemployment rate was driven by a surprise 873,000 surge in the household survey, the largest such increase since 2003.
“The jump in employment reported in September was almost certainly a statistical fluke,” Dean Baker, director of the left-leaning Center for Economic and Policy Research, wrote in a note.
However, Baker also said the unemployment rate is “almost certainly” moving downward, though likely at a “considerably slower” rate than the latest data suggest.
Economists often prefer the less volatile nonfarm payrolls which, which showed employers added 114,000 jobs in September, nearly matching the 113,000 economists had forecasted. Importantly, the estimates for job gains for August and July climbed by a combined 86,000 jobs.
Private-sector jobs rose by 104,000 in September, missing estimates for a gain of 130,000 but above August's reading of 97,000.
The September jobs report and unemployment rate, the next-to-last labor data before the election, could also influence the race for the White House, potentially providing a boost to President Obama after his lackluster debate performance Wednesday night.
Later on Friday Wall Street could be influenced by a new report on consumer credit from the Federal Reserve. Economists see this report showing credit jumped $6 billion in August after sinking $3.3 billion the month before.
In the turbulent eurozone, Greece’s stock market surged about 4% to the best levels since February thanks to talk of a merger between the National Bank of Greece (NYSE:NBG) and rival Eurobank.
On the commodities front, crude oil continued its rollercoaster ride of late. After plunging 4% on Wednesday and then surging back by the same amount the next day, crude slid $1.83 a barrel, or 2.00%, or $89.88. Gold declined $12.90 a troy ounce, or 0.72%, to $1,783.60.
The modest rally on Wall Street comes after the blue chips rallied 81 points on Wednesday, fueled by stronger-than-expected economic data and optimism about the presidential election triggered by Mitt Romney's strong debate performance.
Corporate Movers
Zynga (NASDQ:ZNGA) plummeted another 20% to fresh all-time lows after the online game maker projected a loss of 12 cents to 14 cents a share for the current quarter, compared with forecasts for a breakeven quarter. The news also weighed on Facebook’s (NASDAQ:FB) shares.
Constellation Brands (NYSE:STZ) revealed a 23% slide in fiscal second-quarter earnings, but the wine and spirits maker’s adjusted profits and full-year guidance surpassed Wall Street’s expectations.
J.P. Morgan Chase (NYSE:JPM) regulatory chief Barry Zubrow is expected to leave the bank, the latest in a string of departures following the London Whale trading debacle. Zubrow, formerly chief risk officer, is seen leaving before the end of the year, The Wall Street Journal reported.
Global Markets
The Euro Stoxx 50 soared 1.83% to 2531.21, London’s FTSE 100 gained 0.74% to 5871.02 and the German DAX jumped 1.27% to 7397.87.
In Asia, Japan’s Nikkei 225 rose 0.44% to 8863.30 and Hong Kong's Hang Seng advanced 0.50% to 21012.38.