US markets gain despite jobs data

Nasdaq manages to creep in the green for the first time on a year to date basis

The last day of the week brought strong gains for Wall Street for the week that ended on Friday, 06 February, 2009. Despite a weak job market report from the Labor Department, US stocks showed that they were very much prepared for the report and they rallied right out of the gate since morning hours on Friday. Investors were waiting with a bated breath for Congress to go ahead with the stimulus plan proposed by Barack Obama's government. Traders anticipate that Treasure Secretary Geithner will present a draft of the proposal as early as Monday, 09 February, 2009.

The Dow Jones Industrial Average gained 279.73 points (3.5%) for the week to end at 8,280.59. Tech - heavy Nasdaq gained 115.29 (7.8%) to end at 1,591.71. S&P 500 gained 42.72 (5.2%) to end at 868.6. This week's gain has helped Nasdaq inch up in the green on a year to date basis.

Disappointing earnings news and guidance came from some major companies like Disney, Kraft, Costco and Cisco.

While the earning reports during the week were mainly disappointing in nature, the economic reports were mainly a mixed bag.

Both the manufacturing and services surveys completed by the ISM topped expectations. Other than that, pending home sales in December increased 6.3%. Fourth quarter productivity was up 3.2% and brought the year-over-year productivity gain to 2.7%, which was a bit above the long-term trend.

During the week, other reports focused that personal spending dropped 1% in December and personal income dipped 0.2%, reflecting the decline in employment levels. Vehicle sales that checked in were atrocious, slipping to an annualized rate of 9.6 million units in January, which was 7% below the December level and 40% below on a yearly level.

In the US market on Friday, 06 February, 2009, stocks ended substantially higher. The Dow Jones Industrial Average ended higher by 217 points at 8,280, the Nasdaq closed higher by 45 points at 1,591 and the S&P 500 closed higher by 23 points at 868.

Among major economic reports of the day, the Labor Department reported on Friday, 06 February, 2009 that the fury of the recession intensified in January, as the nation's unemployment rate jumped to 7.6% and nonfarm payrolls fell by the largest amount in 34 years. Nonfarm payrolls fell by a seasonally adjusted 598,000 in January, on the heels of a revised loss of 577,000 in December, 2008. Payrolls fell by 597,000 in November, 2008. January marked the largest payroll loss since December 1974.

Job losses were widespread across industries. The goods-producing industries lost 319,000 jobs, the most since 1975. Manufacturing payrolls fell by 207,000, the most since 1982. Manufacturing employment has fallen by 1.1 million since the recession began in December 2007. Of 83 manufacturing industries, just 8% were hiring in January, the lowest percentage on record dating back to 1991. Total hours worked in manufacturing fell 2.1% in January.

The financial sector led Friday's rally. Since the bank bailout plan is likely to provide the most immediate impact on the financial system and the broader economy, the sector posted good gains. There were also reports in the market that indicated that the economic stimulus plan is approaching completion, but there are still concerns that it may not secure adequate support.

For the year 2009, Dow and S&P 500 are down by 5.6% and 3.8% respectively. Nasdaq is marginally up by 0.9%.