U.S. Stocks Seeing Continued Strength As Jobs Data Adds To Interest Rate Optimism

Stocks have moved mostly higher during trading on Friday, extending the upward move seen over the past several sessions. The tech-heavy Nasdaq is advancing for the sixth consecutive session, while the Dow and the S&P 500 are climbing for the fifth straight day.

Currently, the major averages are off their highs of the session but still firmly positive. The Nasdaq is up 124.49 points or 0.9 percent at 13,418.68, the S&P 500 is up 34.11 points or 0.8 percent at 4,351.89 and the Dow is up 160.39 points or 0.5 percent at 33,999.47.

The continued strength on Wall Street reflects a positive reaction to a Labor Department report showing U.S. employment rose by less than expected in the month of October.

The closely watched report said employment climbed by 150,000 jobs in October after jumping by a downwardly revised 297,000 jobs in September.

Economists had expected employment to increase by 180,000 jobs compared to the surge of 336,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate crept up to 3.9 percent in October from 3.8 percent in September. The unemployment rate was expected to remain unchanged.

The data has added to optimism the Federal Reserve is done raising interest rates after the central bank left rates unchanged for the third time in four meetings earlier this week.

Treasury yields are extending a recent slump following the release of the report, adding to the buying interest on Wall Street.

“Given that jobs growth is slowing and the unemployment rate is ticking up slightly, that is the kind of data that will keep the Fed on hold and both stock and bond prices should move higher (bond yields lower) in the absence of a more aggressive Fed,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

A separate report released by the Institute for Supply Management showed a bigger than expected slowdown in the pace of growth in U.S. service sector activity in the month of October.

The ISM said its services PMI fell to 51.8 in October from 53.6 in September, although a reading above 50 still indicates growth. Economists had expected the index to edge down to 53.0.

Sector News

Airline stocks have shown a substantial move to the upside on the day, with the NYSE Arca Airline Index soaring by 4.1 percent. The index continues to recover after ending Wednesday’s trading at its lowest closing level in over three years.

Interest-sensitive housing stocks are also seeing considerable strength on the day, resulting in a 3.8 percent spike by the Philadelphia Housing Sector Index. With the jump, the index has reached its best intraday level in almost two months.

Significant strength is also visible among gold stocks, as reflected by the 3.2 percent surge by the NYSE Arca Gold Bugs Index. The strength in the sector comes amid a modest increase by the price of gold.

Biotechnology, banking and commercial real estate stocks are also seeing notable strength, while energy stocks are among the few groups bucking the uptrend amid a steep drop by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved notably higher on Friday, with the Japanese markets closed for a holiday. Hong Kong’s Hang Seng Index soared by 2.5 percent, while South Korea’s Kospi jumped by 1.1 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is down by 0.5 percent, the French CAC 40 Index is up by 0.1 percent and the German DAX Index is up by 0.5 percent.

In the bond market, treasuries are extending the strong upward move seen over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 12.3 basis points at 4.546 percent.

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