Stock Market News for May 11, 2015 – Zacks Investment Research
Markets ended the last trading session of the week in the green boosted by upbeat nonfarm payroll data. The benchmarks gained more than 1% on Friday, with the Dow registering its largest one-day percentage gain in more than three months. Friday’s encouraging jobs report also helped the benchmarks finish mostly in positive territory for the week.
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The Dow Jones Industrial Average (DJI) gained 1.5% to close at 18,191.11. The Standard & Poor’s 500 (S&P 500) advanced almost 1.4% to 2,116.10. The tech-laden Nasdaq Composite Index closed at 5,003.55; increasing 1.2%. The fear-gauge CBOE Volatility Index (VIX) dropped 15% to settle at 12.86. A total of about 6.6 billion shares were traded on Friday, lower than the last five trading days’ average of 6.8 billion. Advancers outpaced declining stocks on the NYSE. For 78% stocks that advanced, 19% declined.
According to the Bureau of Labor Statistics, the U.S. economy created a total of 223,000 jobs in April, short of the consensus estimate of 225,000. However, it was significantly higher than March’s revised job number of 85,000. March’s figure was revised down from previously reported 126,000.
While professional and business services, health-care providers, and the construction industry added 62,000, 45,000 and 45,000 jobs respectively, the mining industry trimmed 15,000 jobs. Meanwhile, hiring in manufacturing sector remained unchanged, indicating the adverse effect that stronger dollar had on U.S. export oriented companies.
Moreover, labor force participation rate came in at 62.8%, little changed from the prior month’s 37-year low rate of 62.7%. The labor force participation rate continues to trade in a very narrow range of 62.7% to 62.9% since April 2014.
The unemployment rate went down to a seven year low figure of 5.4% in April from 5.5% in March. The unemployment rate came in line with the consensus estimate. The U-6 unemployment rate also slipped to 10.8% in April from 10.9% in March.
Additionally, the average hourly earnings gained 0.1% in April from previous month’s figure to $24.87 per hour, lower than the consensus estimate of a 0.2% rise. The average hourly earnings witnessed a 2.2% rise from the year-ago figure.
Investors welcomed the jobs data that indicated the economy was on a solid footing, giving the Federal Reserve an option to raise interest rates later this year.
Separately, the U.S. Department of Commerce announced that the US wholesale inventories rose 0.1% in March after it increased 0.2% in February. This rise in wholesale inventories in March was less than the consensus estimate of a rise of 0.3%.
Friday’s gains were broad based with all 10 sectors of the S&P 500 ending in the green. The Energy Select Sector SPDR (XLE) gained 1.64%, the highest among the S&P 500 sectors. Dow components Exxon Mobil Corporation (XOM – Analyst Report) and Chevron Corporation (CVX – Analyst Report) advanced 1.6% and 1%, respectively. Among other key stocks from the sector, Kinder Morgan, Inc. (KMI – Analyst Report), Schlumberger Limited (SLB – Analyst Report) and ConocoPhillips ( (COP – Analyst Report) increased 0.9%, 2.4% and 0.8%, respectively.
The Health Care Select Sector SPDR (XLV) advanced 1.62% and was the second biggest gainer among the S&P 500 sectors. Health care sector was boosted by gains in biotech shares. Shares of biotech stocks including Celgene Corporation (CELG – Analyst Report), Biogen Inc. (BIIB – Analyst Report), Amgen Inc. (AMGN – Analyst Report), Gilead Sciences Inc. ( (GILD – Analyst Report) and Regeneron Pharmaceuticals, Inc. (REGN – Analyst Report) increased 1.1%, 3.9%, 2.8%, 2% and 2.7%, respectively. Overall, the iShares Nasdaq Biotechnology (IBB) gained 2.3%.
For the week, the S&P 500 and the Dow gained 0.4% and 0.9%, respectively. However, the Nasdaq declined a meager 0.05%. Friday’s gains due to upbeat jobs report helped benchmarks settle mostly in positive territory for the week. A less-than-expected rise in initial claims numbers on Thursday had already set the tone for the crucial non-farm payroll data.
Additionally, easing in bond yields, gains in technology stocks and a handful of upbeat earnings results also boosted investor sentiment. Berkshire Hathaway Inc. (BRK-B), Cognizant Technology Solutions Corporation ( (CTSH – Analyst Report), Comcast Corporation (CMCSA), Tyson Foods, Inc. (TSN), The Estée Lauder Companies Inc. (EL), The Walt Disney Company (DIS), Kellogg Company (K), Chesapeake Energy Corporation (CHK), Tesla Motors, Inc. ( TSLA), Apache Corp. (APA), The Priceline Group Inc. (PCLN) and Whole Foods Market, Inc. (WFM) posted better-than-expected first quarter earnings results.
Separately, an expansion in the Eurozone’s manufacturing activity in April also boosted investor sentiment. However, Fed Chairwoman Janet Yellen’s comments that stock valuations are “quite high” had a negative impact on investor sentiment. Yellen had warned investors of high equity valuation risks in a low interest rate environment.
Additionally, weak private sector hiring numbers along with U.S. trade deficit touching its highest level in almost six and a half years added to the bearish sentiment.
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Stock Market News for May 11, 2015 – Zacks Investment Research
