Modest weekly gains for US stocks

Job report checks in better than expected

US stocks ended higher for the week that ended on Friday, 07 October 2011. Though stocks kicked off the week on a slow note, middle of the week saw stocks climb sharply for the broad market's best back-to-back performance in more than a month. A better tan expected job report gave a nice final push to stocks at the end of the week and the same ended with modest gains.

For the week, that ended on Friday, 07 October 2011, Dow ended higher by 189.74 points or 1.7% to 11,103.12. The Nasdaq gained 63.95 points or 2.6% to 2,479.35 and the S&P 500 gained 24.04 points or 2.1% to 1,155.46.

On Wednesday, participants were given insight into the official September payrolls number by an ADP Employment Change report that showed that private payrolls increased by 91,000. The ISM Services Index for September was shrugged off; it slipped to 53.0 from 53.3 in the prior month, but still narrowly exceeded the 52.8 that had been widely expected.

U.S. stocks ended lower on Friday, 07 October 2011 denting weekly gains, as credit-rating cuts for Italy and Spain offset a better-than-anticipated payrolls report, prompting caution before the weekend. The Dow Jones Industrial Average lost 20.21 points, or 0.2%, to 11,103.12. The Standard & Poor's 500 Index shed 9.51 points, or 0.8%, to 1,155.46. The Nasdaq Composite Index declined 27.47 points, or 1.1%, to 2,479.35. The major equity averages lacked direction this morning, even though premarket participants had cheered the September jobs report.

Stocks took a definitive turn lower after Fitch cut Spain and Italy's credit ratings, saying both countries were more likely to default doe to Europe's debt trouble. Investor sentiment drew a lift from a rosier-than-forecast report on U.S. jobs growth but lost steam as investors squared positions ahead of the weekend.

Among economic data expected for the day, the latest job report showed that the labor market showed some small signs of improvement in September as job growth came in above market expectations and there were positive revisions to past months. The Labor Department reported that employment outside the farm sector grew by 103,000 workers in the month while Wall Street had expected a tepid 59,000 increase in nonfarm payrolls for the month. The gain in September was due in part to the return of about 45,000 workers following a strike against Verizon communications by unionized workers.

The unemployment rate held steady at 9.1% as expected. Average hourly earnings increased 0.2% to $23.12 in September, reversing a drop in August.

Financials were a drag all session. The sector descended to loss as bank stocks buckled. Banks were likely imbued by news that analysts at Moody's downgraded a dozen banks in the United Kingdom and a handful of others in Portugal.

Crude prices ended marginally higher at Nymex on Friday, 07 October 011. A better than expected job data helped prices end higher even though sovereign downgrades of Italy and Spain by Fitch rating weighed on the same earlier during the day.

Light and sweet crude for November delivery rose $0.39 (0.5%) to $82.98 a barrel on the New York Mercantile Exchange on Friday. Prices closed 4.8% higher for the week. For the month of September, oil futures lost 11%, and for the quarter, crude incurred losses of 17%. It was the worst quarterly performance for crude in almost two years.

Precious metals ended lower on Friday, 07 October 2011 at Comex. Prices snapped a two-day winning streak as investors shied away from the metal amid a lack of catalysts to spur flight-to-safety buying. Commodities and stocks got an early a boost from a better-than-expected report on the U.S. job market, but that lift was short-lived as traders looked closer at the numbers. Gold for December delivery fell $17.4 or 1.1%, to end at $1,635.8 an ounce on the Comex division of the New York Mercantile Exchange on Friday. Unable to catch a defensive-buying boost after debt downgrades for Italy and Spain, prices had fluctuated between small gains and losses earlier in the session. For the week, gold gained 0.8%. On Friday, silver prices for December delivery fell $1.01 (3.2%) to end at $30.99. For the week, silver rose 3%.

For every stock that rose more than two fell on the New York Stock Exchange, where more than 1.1 billion shares traded hands; composite volume neared 4.8 billion shares.

Among notable movers, shares of Sprint Nextel fell 20% after the wireless-service provider said it would need to raise more capital to expand a high-speed data network.

For the year, Dow, Nasdaq and S&P are lower by 4.1%, 6.5% and 8.1% respectively. The week ahead will witness Google, Alcoa and JP Morgan kick off the Q3 earnings season. Also next week, reports on September retail sales and October consumer sentiment will provide more insight into how consumers are faring. The Federal Reserve will release minutes from its last meeting, when it decided on a bond-swap program dubbed “Operation Twist.”