A series of bullish economic reports nudged the Dow Jones Industrial Average into record territory for the third consecutive day on Friday.
All of the major averages closed out the trading week with very healthy gains as risk appetite continues to be brisk on Wall Street. Friday’s modest rally was driven by an upbeat nonfarm payrolls report which showed that the economy added 236,000 jobs in February, well above the consensus view.
Hiring helped push the unemployment rate down to 7.7 percent last month, its lowest level since December 2008
Major Averages
The Dow Jones Industrial Average climbed 68 points, or 0.47 percent, to a new record close of 14,397. The S&P 500 rose 7 points, or 0.47 percent, to 1,551.
The Nasdaq Composite gained 12 points, or 0.38 percent, to close at 3,244.
Nonfarm Payrolls
Positive market sentiment was driven in large part by a strong nonfarm payrolls report on Friday. For February, nonfarm payrolls added 236,000 jobs versus 119,000 jobs added in January. This figure was significantly ahead of consensus expectations of 165,000 jobs gained in the month.
The private sector added 246,000 jobs in February versus a gain of 140,000 in January. The consensus had expected private nonfarm payrolls to expand by 178,000 jobs last month.
Unemployment Rate
The uptick in job creation in February led to a decline in the unemployment rate from 7.9 percent in January to 7.7 percent last month. Consensus estimates called for the unemployment rate to remain unchanged. At 7.7 percent, unemployment is at its lowest level since December 2008 — a strong sign for the economy.
Hourly Earnings and Average Work Week
The good news extended to average hourly earnings and average weekly hours worked. Hourly earnings rose 0.2 percent in February versus a gain of 0.1 percent in January.
The average work week went from 34.4 hours in January to 34.5 hours in February. The gain in hours, earnings, and payrolls led to an impressive 0.7 percent increase in aggregate wages.
Commodities
Crude oil was mixed on Friday, with WTI crude trading on NYMEX rising marginally and Brent crude futures falling. At last check, NYMEX crude was up 0.25 percent to $91.80 while Brent contracts had lost 0.48 percent to $110.62. Natural gas had added 1.31 percent to $3.63 at last check.
Precious metals recorded small gains on the session. Nearing the close of equities, COMEX gold futures had risen 0.17 percent to $1,577.70 and silver futures were up 0.63 percent to $28.99. Copper recorded a loss of less than 0.20 percent on Friday.
In the grain complex, corn had risen nearly 2 percent heading into the close of the week and wheat was up around 0.22 percent. Significant movers in soft commodities included cocoa, up almost 3 percent, and orange juice concentrate futures which surged almost 7 percent.
Bonds
Near the close of equities, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE: TLT) had fallen another 1 percent to $114.80. The TLT is now down almost 8 percent in just 3 months’ time as investors have been selling bonds amid a stock market rally. The fall in prices caused yields to rise.
Although the yield on the 2-Year Note remained steady at 0.25 percent, the yield on the 5-Year Note jumped four basis points to 0.89 percent.
The 10-Year Note yield climbed six basis points on the day to 2.06 percent while the 30-Year Bond yield rose five basis points to 3.25 percent.
Currencies
A sharp rise in the greenback on Friday did not deter investors from buying stocks. Near the close, the PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP), which tracks the performance of the greenback versus a basket of foreign currencies, was up 0.76 percent to $22.56, adding to its recent gains.
The closely watched EUR/USD pair was last trading down 0.81 percent to $1.3001 as the euro attempts to hold above a key support level. The British Pound also fell 0.61 percent against the U.S. dollar. The USD/JPY pair jumped sharply on the day, with the greenback adding 1.30 percent versus the yen.
Volatility and Volume
The VIX fell again on Friday and the widely watched volatility index is closing in on 52-week low levels once again. The VIX fell 3.45 percent on the session to 12.61.
Volume remained light on Friday despite broad gains recorded on the trading week. Around 110 million SPDR S&P 500 ETF (NYSE: SPY) shares traded hands on the session compared to a 3-month daily average of 133.6 million.
Stock Movers
Skullcandy (NASDAQ: SKUL) plunged more than 22 percent after management offered a weak Q1 outlook on its fiscal Q4 conference call. H&R Block (NYSE: HRB) jumped better than 9 percent on the session after the company released a bullish fiscal third-quarter earnings report.
Navistar International (NYSE: NAV) closed out a sharp two-day rally with a gain of around 11 percent on Friday. The catalyst for the move was the company’s first quarter earnings results, released on Thursday morning.
Women’s apparel retailer Ann Inc. (NYSE: ANN) climbed almost 8 percent after a bullish fiscal Q4 earnings report.
Finisar (NASDAQ: FNSR) fell more than 8 percent after releasing its fiscal third-quarter financial results.
BroadVision (NASDAQ: BVSN) surged around 22 percent on Friday. The micro-cap name is a favorite momentum play for penny stock traders and was the subject of a promotional campaign in early 2012.
Shares of small-cap name Ambarella (NASDAQ: AMBA) rose more than 13 percent after the company said its fourth quarter net income nearly doubled versus the year ago period.
Biotech firm Sequenom (NASDAQ: SQNM) fell roughly 4 percent Friday in the wake of reporting a wider than expected fourth-quarter loss.
Maxwell Technologies’ (NASDAQ: MXWL) share price plummeted 11 percent after the company said that it will restate financial results from 2011 and most of 2012 due to errors in timing of recognition of sales from certain distributors.
Internet radio pioneer Pandora Media (NYSE: P) saw its share price surge almost 18 percent on Friday. The company beat Wall Street earnings and revenue estimates for its fiscal fourth-quarter.
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