Indexes rouse themselves to finish at new highs
Jobs data make interest rate hike more likely but wage growth is a concern
Universal Display's shares sparkle after first quarter update
Having spent much of the day dithering, blue chips finally decided to end the week on a bright note, pushing indexes to record levels.
The Dow Jones, which earlier had been weighed down by negative sentiment towards International Business Machines Corp (NYSE:IBM) roused itself to finish 55 points higher at 21,007. The index was up 0.3% on the week.
The broader-based S&P 500 closed at 2,399, up 10 points. It rose 0.9% on the week.
In Canada, the S&P/TSX Composite put in a strong shift, finishing up 185 points at 15,582.
Oil prices rebounded in the afternoon session, clawing back some of the previous day's losses.
The big release of the day was the non-farm payrolls update for April.
Wells Fargo described it as “a solid report”.
“The employment data through the first four months of this year have been significantly impacted by a number of seasonal influences,” the bank noted.
“While average hourly earnings rose only modestly, total hours worked rose by a stronger 0.5 percent in April. Taken together, the two gains should produce solid income growth in April and help drive a rebound in consumer spending during the second quarter,” the bank predicted.
1.32pm ... Dow still down in the dumps
Stocks were still seeking direction in the lunchtime trading session.
The Dow Jones average, weighed down by International Business Machines Corp (NYSE:IBM), was off 9 points at 20,945 but the broader-based S&P 500 was up 2 at 2,392.
Universal Display Corporation (NASDAQ:OLED), the displays and lighting technology firm, was a bright spot on Friday after announcing results Thursday evening.
Appropriately enough for a light technology company, Universal Display said it had greater visibility on revenues, and lifted full-year guidance.
In Canada, the S&P/TSX Composite index was going well, up 183 at 15,580.
9.50am ... Dow Jones dragged under by IBM but S&P ekes out a gain
The Dow Jones and the S&P 500 have gone their separate ways, with the former laid low by a sell-off of IBM shares.
International Business Machines Corp (NYSE:IBM) shares were down 2.6%, dragging the Dow Jones average – down 5 at 20,946 – into the red with it, after legendary investor Warren Buffett revealed on Thursday he had sold around a third of his stake in the computing leviathan.
While the Dow was down, the S&P 500 was up 3 at 2,393 after April's jobs numbers came in stronger than expected.
Marcus Bullus, trading director at MB Capital, said: "The April jobs print was steady-as-she-goes rather than scintillating. Just marginally above consensus, the market response was fairly subdued.
"After the March miss and lacklustre first quarter GDP data, traders will be encouraged that things are back on track, but the number wasn't as big as some were quietly hoping for.
"That wage growth remains stubbornly muted, and the participation rate so low, is nagging away at the markets.
"The world's biggest economy is by no means flat, but neither is it firing.
"If the April jobs data has done anything, it's shortened the odds on a June rate rise,” the inaptly named Bullus said.
If a rate hike is now nailed on, one would expect money to flow into the dollar but in fact the greenback has slumped, with traders focused on the weak wage growth.
California Resources Corp (NYSE:CRC) was the top performer on the big board after the energy company's first quarter production came in at the higher end of its guidance range.
The shares were up 24% at US$12.58 in early deals.
On Nasdaq, investors were piling into biopharmaceutical company Immunomedics Inc (NASDAQ:IMMU) after it announced a number of strategic steps to “drive stockholder value”.
These included the termination of the previously announced exclusive global licensing agreement with Seattle Genetics (NASDAQ:SGEN), thus resolving a legal bust-up between the two, and a number of management changes, including the departure of chief executive officer Cynthia Sullivan.
Market preview
US jobs numbers for April were stronger than expected, but blue-chips are still expected to open mixed.
Spread betting quotes point to the S&P 500 opening around 2,393, up two points or so on the situation before the jobs report was released and a couple of points higher than last night's close, but the Dow Jones is tipped to open slightly lower.
The Dow Jones industrial average, which closed at 20,951 last night, is seen opening its account a point or two below that level.
April saw 211,000 new jobs created in the non-farms sector, topping the consensus forecast of 190,000 additional jobs.
The unemployment rate eased to 4.4% from 4.5% in March, versus expectations of an unchanged rate.
“Following March’s surprisingly low non-farm payroll reading, both President Trump and Janet Yellen will be pleased to see it bounce back significantly in April,” suggested Dennis de Jong, managing director at forex trading platform operator UFX.
“There have been a few bumps in the road for the Fed to navigate in recent weeks, but these are expected to smooth out in time.
“Low levels of productivity growth is perhaps the biggest concern, although economic confidence remains high within the business community.
“It clearly hasn’t been plain sailing for the Fed, but the US economy still appears to be on the right path and a further two interest rate hikes this year remains the most likely scenario,” de Jong opined.
Oil stocks were expected to be in focus when open outcry trading starts after crude oil futures took a biffing overnight.
The US oil benchmark, West Texas light sweet crude (WTI) , and the European benchmark, Brent crude, both fell 4.8% yesterday.
WTI was off 0.9% this morning while Brent crude was down 0.7%.
“Oil prices are volatile amid uncertainty about extension of OPEC production cuts,” noted Mike van Dulken, head of research at spread betting outfit Accendo Markets.
Ahead of the bell, health services company Cigna Corporation (NYSE:CI) was seeing buying interest in screen-based trading after a solid set of first quarter results.
Total revenues in the quarter were US$10.4 billion, an increase of 5% over first quarter 2016, driven by continued strong business growth in Cigna's Commercial Healthcare and Global Supplemental Benefits segments, partially offset by contraction, as expected, in its Seniors business.
Net income rose to US$598mln from US$519mln.