US stocks surge on strong non-farm payroll hopes

Stronger than expected ADP employment data, rebound in retail sales increases appetite for cyclic stocks

US stockmarket ended solidly higher on Thursday, 7 July 2011, as investors chased for risky assets on gaining confidence over economic growth after the release of two stronger-than-anticipated reports on the jobs market.



Market participants chased for riskier assets after much better than expected economic data cementing confidence over US economy. The jobs data helped many feel that stability was possible and the job market was stepping towards firmer ground.

Traders speculated that Friday's employment report from the U.S. government would show better-than-expected job creation after data from payroll firm Automatic Data Processing suggesting American private sector employers created 157,000 jobs in June, exceeding market expectation. At the same time, the U.S. Labor Department reported that the number of people who made first-time claims for unemployment benefits dropped to 418,000 last week, the lowest level in seven weeks.

Friday's morning before the open, two economic reports are scheduled to be released, namely Nonfarm payrolls, Nonfarm private payrolls and Unemployment, Average workweek and Hourly earnings. Meanwhile during the day, reading on wholesale trade and consumer credit data will also publish.

At the finish bell, the Dow Jones Industrial Average closed up 93.47 points or 0.74% at 12,719.49. The broader S&P 500 rallied 14 points or 1.05% to 1,353.22, while the tech-heavy Nasdaq Composite rose 38.64 points or 1.36% to 2,872.66.

Among sectoral indices, major gainers were Advancing Sectors: Financials (+1.6%), Materials (+1.5%), Tech (+1.4%), Energy (+1.4%), Consumer Discretionary (+1.3%), Industrials (+1.0%), Consumer Staples (+0.6%), and Utilities (+0.4%), while Health Care ended tad 0.1% weaker.

Back to equities, retailers and consumer goods stocks outperformed the market after several retailers reported better-than-expected June sales. Urban Outfitters led rally, up more than 6%, followed by Target, Kohl's, and Limited Brands.

Financial sector also ended stronger, with Bank of America, JPMorgan Chase and American Express among the top performers.

The tech sector also contributed the most to index strength with KLAC and MU were notable leaders.

Materials and energy stocks also complemented the sector's leadership, powered by gains in copper and crude oil futures prices.

Defensive-oriented stocks failed to participate in the latest leg of gains, with telecom was mired at the neutral line while health care actually logged a loss.

Indian ADRs ended with firm tone on Thursday. Tata Communications, Wipro, Tata Motors, Infosys Technologies, ICICI Bank, Cognizant Technology Solutions Corp, Dr. Reddy's Laboratories, HDFC Bank, Rediff.com India, Mahanagar Telephone Nigam, and Sterlite Industries India closed higher by 3.5%, 3.1%, 2.8%, 2.7%, 2.3%, 2.1%, 1.4%, 1.4%, 1.1%, 1.1%, and 0.9%, respectively. On the other side, Sify Technologies, D WNS Holdings, and Patni Computer Systems fell 6.8%, 1.1%, and 0.6%, respectively.