Closing Summary: Stocks End Slightly Higher After Strong Jobs Report Rekindles Rate Hike Concerns The Dow (+0.3%), Nasdaq (+0.2%), and S&P 500 (+0.2%) ended the Friday session near their flat lines, allowing the benchmark index to register its seventh consecutive weekly advance. The S&P 500 added 0.4% for the week, while the Russell 2000 (+0.8%) outperformed to extend its weekly gain to 0.7%. Also of note, the tech-heavy Nasdaq outperformed slightly today, but still ended the week in the red (-0.2%). Prior to the open, the Nonfarm Payrolls report revealed the addition of 321,000 jobs in November while the Briefing consensus expected a reading of 230,000. Although the data point came in well ahead of estimates, the stock market struggled for direction before following the financial sector (+1.0%) higher. Outside of financials, only the health care sector (+0.8%) was able to add more than 0.3%. As for the broader market, the S&P 500 notched its high just ahead of noon ET and slipped from that level into the close. The lack of broad strength following a solid jobs report was a reflection of concerns that the Fed may be inclined to hike the fed funds rate sooner than the market expected. These concerns showed up in the Dollar Index (89.34, +0.64) and the Treasury market with the 10-yr note diving to send the benchmark yield higher by seven basis points to 2.31%. At the front of the curve, the 2-yr yield climbed nine basis points to 0.64%. Conversely, higher Treasury yields contributed to the strength in the financial sector, which is poised to benefit from improved net interest margins of banks. If rates rise at the short end of the Treasury yield curve that would allow banks to charge higher interest on loans while deposit rates would likely remain close to where they are now. Top-weighted sector members rallied across the board with Dow components JPMorgan Chase (JPM 62.70, +1.32) and Goldman Sachs (GS 195.45, +3.50) spiking 2.2% and 1.8%, respectively, while the sector ended the week ahead of the remaining nine groups (+1.8%). Meanwhile, the remaining cyclical sectors settled closer to their flat lines. Consumer discretionary (+0.3%) and industrials (+0.2%) registered modest gains while energy (-1.2%), materials (-0.1%), and technology (-0.2%) ended in the red. The industrial sector was underpinned by defense and transport stocks. The PHLX Defense Index rose 0.6% while the Dow Jones Transportation Average gained 0.4%. Elsewhere, the discretionary sector received support from restaurants, homebuilders, and media names while retailers underperformed after American Eagle Outfitters (AEO 11.91, -1.90), Big Lots (BIG 40.00, -7.95), and Five Below (FIVE 37.61, -5.24) disappointed with their results or guidance. Gap (GPS 40.74, +0.18) bucked the trend, climbing 0.4%, after reporting better than expected same store sales for November, but the SPDR S&P Retail ETF (XRT 92.43, -0.30) shed 0.3%. Also of note, the top-weighted technology sector spun its wheels throughout the day as large cap components weighed while chipmakers rallied after Freescale Semiconductor (FSL 24.79, +1.36) was upgraded to ‘Buy from ‘Hold at Evercore ISI. Shares of FSL jumped 5.8% while the PHLX Semiconductor Index settled higher by 1.0%. Chipmakers helped the Nasdaq Composite finish a little ahead of the broader market while biotechnology also chipped in with the iShares Nasdaq Biotechnology ETF (IBB 308.81, +2.61) climbing 0.9%. In turn, the strength helped the health care sector (+0.8%) register a solid gain. On the downside, the energy sector (-1.2%) was pressured by a 1.8% decline in crude oil ($66.75/bbl) while the rate-sensitive utilities sector (-0.8%) lagged as Treasury yields climbed. Todays participation was a bit below average with 738 million shares changing hands at the NYSE floor.
Posted on: Sat, 06 Dec 2014 04:13:07 +0000
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