Stocks rebound to post weekly gain
Published 07/02/2014 | 23:42
As comebacks go, this one was a couple of days in the making.
Today, the US stock market rebounded from a deep slump earlier in the week to muster the first positive five-day stretch after three weeks of declines.
The day's modest gains added to a strong finish for stocks a day earlier, enough for the Dow Jones industrial average to eke out a 0.6% gain for the week, while the S&P 500 index finished up 0.8%. Both are still down for the year.
The Dow Jones industrial average rose 165.55 points, or 1.1%, to 15,794.08. The Standard & Poor's 500 rose 23.59 points, or 1.3%, to 1,797.02. The Nasdaq composite increased 68.74 points, or 1.7%, to 4,125.86.
Expedia led the gains in the S&P 500 index, surging 14% after reporting that its profit and revenue jumped as hotel bookings increased.
Today's rally did not seem likely to happen as the day got going.
A widely anticipated jobs report from the Labour Department showed US employers added 113,000 jobs last month, less than the average monthly gain of 194,000 in 2013. This followed December's tepid increase of just 75,000.
The overall payroll figure disappointed markets, and index futures fell before regular stock trading began.
Stocks moved higher in mid-morning trading as investors dug deeper into the details of the report, which also showed that manufacturers, construction firms and mining and drilling companies added 76,000 jobs combined, a strong showing.
"The market had a tough time figuring out what to do with the (jobs) number when it first came out," said JJ Kinahan, chief strategist with TD Ameritrade.
The government also reported that the nation's unemployment rate dipped to 6.6% in January from 6.7% in December. It was the lowest rate since October 2008.
The market dug itself a hole at the start of the week, plunging more than 2% on Monday. The slide began with investor anxiety over an industry survey that found that manufacturing grew much more slowly in January than in December. Lacklustre US car sales for January added to the bad news.
The outlook began to brighten at midweek, with a survey of private businesses that showed companies added 175,000 jobs in January, roughly in line with average monthly gains the past two years.
Yesterday, news that fewer people applied for unemployment benefits last week helped lift the market.
The Dow is still down 4.7% for the year, while the S&P 500 is down 2.8%.
Did the government's latest survey of the job market give investors reason to feel better about the economy? Hard to say.
Many analysts have been predicting that stocks were due for a decline after reaching record highs at the end of last year. On Monday, it seemed the market was headed firmly for just such a decline, which is known among investors as a "correction," or a drop of 10% or more from a recent peak.
Some market watchers, however, pointed to this week's rebound as a sign that stocks have become more stable.
"It appears we sort of found our sea legs here in the middle of the week and we're starting to rally back into a more normal valuation pattern," said Phil Orlando, chief equity strategist at Federated Investors.
Others saw the potential for more turbulence.
"This is sort of the new market we live in," Mr Kinahan said.
"There are going to be gyrations where we're higher, we're lower, some quick corrections, some quick rallies. This is going to set a tone for the first half of the year."
Investors will have no shortage of potentially market-moving news to watch out for in the coming weeks.
The bulk of the latest quarterly earnings cycle is over, but the markets will be watching how Washington grapples with another debt ceiling deadline, and how quickly the Federal Reserve moves to reduce its monthly bond purchases.