Job report to dictate momentum at Wall Street

Nonfarm payrolls in US rise for third time in twenty-seven months

US stocks registered gains for fifth straight week that ended on Thursday, 01 April, 2010. The week was a holiday shortened one due to market being closed on the last day of the week on Friday, 02 April because of Good Friday. Economic reports and a few earning reports in the technology sector dominated the week. The week marked quite low volume of trading and all the weekly gains were incurred in the last trading day.

For the week, that ended on Thursday, 01 April, 2010, Dow ended higher by 76.71 points (0.7%) at 10,927.07. Nasdaq ended higher by 7.45 points (0.3%) at 2402.58. S&P 500 gained 11.51 points (1%) at 1178.1. Eight of ten economic sectors ended higher led by substantial gains in energy, materials, and utilities sectors. The consumer discretionary sector lagged while technology sector remained unchanged.

In the technology sector, during the week, Research In Motion was a main laggard, shedding 8.8%, after posting earnings that missed Wall Street's expectations. But Apple posted good gains amid reports it is working on a new iPhone that may be available on carriers other than AT&T (T).

The economic reports during the week had limited impact on trading. Consumption expenditures in February increased 0.3%, as expected, while core personal consumption expenditures were flat, which was not too much of a surprise since the consensus had called for a tepid 0.1% increase. Total and disposable income posted no growth in February, a 0.1% increase had been expected.

March Consumer Confidence rebounded to 52.5 from 46.4, topping the 51 consensus. The ISM Manufacturing Index for March came in at 59.6, which exceeded expectations (57) and marked the best reading in more than five years.

On Thursday, 01 April, 2010, news of a pleasing eurozone Purchasing Managers Index (PMI) and a restated commitment by China to loose monetary policy led the positive mood among market participants in the early going. The best ISM Manufacturing Index reading in five years also gave reason to push stocks even higher.

On that day, the Dow Jones Industrial Average ended higher by 70.44 points at 10,927.07. Nasdaq ended higher by 4.62 points at 2402.58. S&P 500 ended higher by 8.67 points at 1178.1. All ten economic sectors ended higher for the day led by energy, utilities and material sectors.

On Thursday, the labor market was in focus. Weekly initial jobless claims met expectations at 440,000. The ADP private payroll report on Wednesday showed an unexpected decline, shedding 23,000 versus the consensus that called for a gain of 40,000.

The U.S. reports helped commodities extend gains after data from Europe and Asia showed a similarly rosy outlook. Data from Chinese manufacturing climbed and confidence among industrial companies in Japan improved.

The stock market was closed on Friday in recognition of Good Friday. The March employment report, however, was still released at 8:30ET. The effect of the report is expected to dictate market momentum in the current week.

The Labor Department in US reported on Friday, 02 April 2010 that the U.S. economy created 162,000 jobs in March 2010. It was the largest seasonally adjusted increase in nonfarm payrolls in three years. The unemployment rate was steady at 9.7%.

The report detailed that nonfarm payrolls rose for just the third time in the past 27 months. It was aided by the hiring of 48,000 temporary workers to conduct the Census. Excluding the Census workers, payrolls rose by 114,000.

The report was largely in line with expectations. Market was forecasting a 200,000 increase in nonfarm payrolls, with about half of those coming from temporary hires at the Census Bureau.

The report showed that payroll gains were broad based, with 60% of all industries adding workers in March. Goods-producing industries' payrolls rose by 41,000, the first increase since March 2007. Manufacturing payrolls increased by 17,000, with 58.5% of manufacturing industries hiring. Manufacturing hours increased by half an hour to 41 hours per week, with 3.7 hours of overtime on average. Construction employment rose by 15,000, likely a rebound from unseasonably bad weather in February.

Crude oil prices ended substantially higher on Thursday, 01 April 2010 and crossed the $85 mark after a long time. Prices rose as the dollar weakened and due to positive global economic data which boosted overall sentiments.

On Thursday, crude-oil futures for light sweet crude for May delivery closed at $84.87/barrel (higher by $1.11 or 1.3%). During intra day trading, it surpassed the $85 mark. For the month of March, crude rose 5.1%. For the first quarter of this year, crude rose by 5.5%. Year to date, crude is higher by 6.8%.

Natural gas prices ended up 22 cents, or 5.6%, to $4.086 per million British thermal units after a government report showed a smaller-than-expected rise in storage. Natural gas futures started on the red but quickly posted gains after the Energy Information Administration reported a net increase of 12 billion cubic feet for the week ended 26 March. Market had expected a rise of 14 to 18 billion cubic feet. Natural gas had lost 31% in the first quarter of the year.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against basket of six other currencies slipped by 0.3%. The dollar index gained about 0.7% in March and rallied 4% during the first quarter.

On Thursday, gold for June delivery ended at $1,126.1 an ounce, higher by $11.6 (1%) an ounce on the New York Mercantile Exchange. For the month of March, gold slid 0.4%. For the first quarter of this year, gold rose by 1.7%, its sixth quarterly rise. On a year to date basis, gold is higher by 2.7%. On Thursday, May Comex silver futures ended higher by 36 cents (2.1%) at $17.89 an ounce. For the month of March, silver ended higher by 5%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 5.1%.

All Indian ADRs registered hefty gains on Thursday. HDFC Bank and Tata Motors were main gainers soaring 3.5% and 3.4% respectively followed by Infosys and ICICI Bank which soared by 2.3% and 2% respectively.

For the year, Dow, Nasdaq and S&P 500 are higher by 4.8%, 5.9% and 5.6% respectively.