U.S. market continues rally for the fifth day after payrolls report

U.S. equity markets closed slightly higher after trading in a tight range on Friday, 5 November 2010, extending gains for fifth day in row, supported by pleasant employment number, although gains were limited as many of the investors taking breather a day after surging to two-year highs even as better than expected U.S. jobs report.




The financial markets took a breather after the major indices reached their highest levels in more than two years. This came after an eventful week helped support demand for equities. Traders seem to have exhausted themselves after a strong rally following a Republican election victory, fresh stimulus from the Fed, and a stronger-than-expected October job growth.

The U.S. economy added 151,000 jobs in October, the first time it has added jobs since May, after shedding 41,000 in September, according to the Labor Department's non-farm payrolls report. The Labor Department also revised upward payrolls for August and September. The strong showing helped keep October's unemployment rate at 9.6%.

The Dow Jones Industrial Average rose 9 points, or 0.1%, to 11,444. The S&P 500 was up by 5 points, or 0.4% at 1225 and the Nasdaq Composite was higher by 1 point, or 0.06%, at 2578. For the week, the Dow and Nasdaq each rose 2.9%, and the S&P 500 gained 3.6%.

JPMorgan Chase and Wells Fargo rose at least 2.9% to $40.94 on speculation the Federal Reserve may allow stronger banks to boost dividends.

Massey Energy Co. surged 11% to $46.94 on takeover speculation from Alpha Natural Resources Inc.

Starbucks Corp. gained 3.8% to $30.87 after the world's largest coffee-shop operator posted adjusted earnings of 37 cents a share, exceeding market estimates.

Kraft Foods Inc. fell 2.2% to $31.08 after the company third-quarter profit missed market estimates. The world's second-largest food company said its third-quarter profit dropped 8.5% on higher taxes and interest expenses.

Commodity prices ended the week with a surge. The spot gold price closed in on $1400 an ounce, reaching a record of $1398 an ounce. Crude oil futures also surged, reaching almost $87 a barrel.

The U.S. Dollar finished lower for the week, but a rally on Friday helped offer a ray of light for the Greenback. The U.S. Dollar strengthened against most major currencies after the government said the non-farm payrolls grew by 151,000 in October, exceeding pre-market guesses. Friday's strength in the Dollar appears to have shifted interest away from the Fed's quantitative easing action from earlier in the week and back onto the economic fundamentals

The strong showing from the jobs data report helped the U.S. Dollar recover some of its earlier losses particularly against the Euro and British Pound that suffered big losses. The fresh employment data helped give risky assets a boost, driving up demand for commodity sensitive currencies such as the Australian, New Zealand and Canadian Dollars.

Prices on the benchmark Treasury note fell as demand for safer assets was undercut by a report showing that the U.S. economy added jobs. The 10-year Treasury note weakened 13/32, lifting the yield to 2.538%.