US stocks ignore disappointing job report

Loss in government jobs does not shake investors much

US stocks ended with substantial gains for the week that ended on Friday, 08 October 2010. Third quarter earnings reporting season got off to its unofficial start. Corporate news was light and economic data came in mixed, with the latest employment report checking in much worse than expected. The Dow crossed the 11,000 mark for the first time since May during the week.



For the week, that ended on 08 October 2010, Dow ended higher by 176.8 points (1.6%) at 11,006.48. Nasdaq ended higher by 31.16 points (1.3%) at 2,401.91. S&P 500 ended higher by 18.91 points (1.6%) at 1,165.15.

Nine out of ten economic sectors ended higher led by materials sector. Telecom was the only sector to end in the red.

Dow component Alcoa kicked off third quarter earnings report season on a positive note during the week. The aluminum maker's revenue climbed a greater-than-expected 14.6% y/y. The company also issued upside guidance. Other major companies that topped estimates include, Yum! Brands and Costco. Pepsico reported in-line results.

On Friday, 08 October 2010, stocks finished the week at their best levels since May as participants regarded disappointing jobs data as fodder for further quantitative easing. Trading volume remained unimpressive, though Nine out of ten economic sectors ended higher led by energy, materials, and consumer discretionary sectors. Telecom sector was the sole loser.

On that day, the Dow Jones Industrial Average ended higher by 57.9 points at 11,006.48. Nasdaq ended higher by 18.24 points at 2401.91. S&P 500 ended higher by 7.09 points at 1,165.15.

The Labor Department in US reported on Friday, 08 October 2010 that the U.S. economy lost 95,000 nonfarm jobs in September 2010 as local and state governments shed positions at a faster rate than the private sector was adding.

The drop of 95,000 was much wider than the 8,000 decline expected by market and the 57,000 jobs lost in August. The nation's unemployment rate remained steady at 9.6% as fewer new workers joined the labor market than in the previous month.

The unexpected number in the report was due to the weakness in state and local governments. The government sector lost 159,000 jobs including 77,000 temporary Census workers.

The report detailed that private-sector payrolls rose by 64,000 in September. Private payrolls increased a revised 93,000 in August, up from the 67,000 initially estimated.

In the commodities market, precious metals turned strong on Friday, 08 October 2010 at Comex, as the dollar turned weak following Friday's crucial job report. The disappointing job report weighed on the dollar as the traders anticipated that Fed would take additional steps to boost the economy.

On Friday, gold for December delivery ended at $1,350.3 an ounce, higher by $10.3 (0.8%) on the New York Mercantile Exchange. During intra day trading, prices rose to a high of $1,350.8. For the week, gold ended higher by 2.1%. It was the eighth weekly gains for gold. December Comex silver futures ended higher by 52 cents (2.3%) at $23.11. For the week, silver ended higher by 4.8%, its fourth straight weekly gains.

In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies fell by almost 0.2%.

Crude oil prices ended higher on Friday, 08 October 2010 at Nymex. Prices rose as the dollar turned weak. On Friday, crude oil futures for light sweet crude for November delivery closed at $82.66/barrel (higher by $0.99 or 1.2%). For the week, crude gained 1.3%.

Among other energy products on Friday, gasoline for November delivery rose 3 cents, or 1.6%, to $2.15 a gallon. On the week, gasoline has gained 2.9%. November heating oil added 3 cents, or 1.3%, to $2.28 a gallon on Friday. For the week, heating oil posted a 0.5% weekly loss.

Also on Friday, natural-gas futures added 3 cents, or 0.9%, to settle at $3.65 per million British thermal units. That's a 3.9% weekly loss for natural gas, a third consecutive week of losses.

For the year, Dow is higher by 5.5%. Nasdaq is higher by 5.9% and S&P 500 is higher by 4.5%. Earnings reporting season starts to pick up next week, with widely held names such as Intel, JPMorgan Chase, Google and General Electric confirmed to report.