May non-farm payrolls rose 139k, well below the 180k or so the market had expected
Three main indexes end the week on new high but Canadian stocks were weaker on balance
Oil price slides after Trump's Paris Climate Accord withdrawal
Lululemon stretches expectations with first quarter results
US stocks ended the week on a high note, despite soft jobs data for May.
The Dow Jones average put on 62 points at 21,206; the S&P 500 rose 9 points to 2,439; and the Nasdaq Composite climbed 59 points at 6,306.
The closing levels represented new highs for all three indexes.
North of the border, it was a different story, with Canada’s S&P/TSX Composite retreating 27 points to 15,443.
Technology stocks were to the fore, with software giant Microsoft Corp (NASDAQ:MSFT) advancing 2.4%.
Energy stocks fell in line with the weaker oil price, however. West Texas Intermediate eased 1.3% as traders bet on an increase in US oil output following President Trump’s decision to withdraw the US from the Paris Climate Accord.
Lunchtime: Job report? What jobs report?
Having been given pause for thought by the may jobs report, stocks moved ahead confidently over the lunchtime session.
The Dow Jones average was up 72 points at 21,216 while the broader-based S&P 500 was 8 points to the good at 2,439.
Some optimists might have been hoping that the figures were soft enough to persuade the Fed to hold off this month on the inevitable interest rate rise but most pundits deem this unlikely.
“The market expectations have certainly cooled somewhat given today’s disappointing figures, yet it seems pretty much nailed on that the Fed will act this month,” suggested Josh Mahony at spread betting firm IG Group.
Wells Fargo suggested the jobs market may be more buoyant this month.
“The early survey week kept headline job gains lower than trend—watch for a June rebound. Meanwhile job and wage numbers for May still support the case for continued economic growth and stronger income,” the bank’s economics team said.
Lululemon Athletica Inc. (NASDAQ:LULU) shares raced higher after the yoga gear retailer reported first quarter earnings and revenue that exceeded expectations.
Shares jumped 13% to US$54.72 after the company said adjusted earnings per share were US$0.23 for the quarter ended 30 April, down from US$0.33 in the year-ago period but better than analysts’ estimates of US$0.28.
Endocyte Inc. (NASDAQ:ECYT) saw its shares plunge after the biotech firm announced plans for a "strategic restructuring" that includes an about 40% reduction in its workforce and clinical trial changes.
The Nasdaq-listed company, which plans to lay-off 47 employees, largely in the third quarter, said it expects to book total restructuring costs of about US$2.4mln, including severance, clinical trial termination charges and other costs.
The stock was the worst performer, slumping 31% to US$1.88.
Morning report: S&P added just over a point at 2,431
The May jobs report underwhelmed and tempered enthusiasm for stocks, even as indexes hit new highs.
After an hour of trading, the S&P 500 was up one-and-a-half points at 2,431 while the Dow Jones average was 18 points to the good at 21,163.
“The promise of Thursday’s ADP reading quickly disappeared as the government-released non-farm figure arrived; at 138k it was far lower than the 181k forecast, and brought with it a substantial downward revision to last month’s number, from 211k to 174k," noted Connor Campbell, a financial analyst at spread betting firm Spreadex.
“Wage growth was also weak, if expected, at 0.2%. Only the unemployment rate produced a positive surprise, falling for the third month in a row to hit 4.3%, but even that was due to a drop in overall participation,” Campbell noted.
That being said, the general consensus view was that jobs growth was not insipid enough to persuade the Federal Reserve to hold off hiking interest rates this month.
On the corporate side, two retailers enjoyed very different fortunes.
Home furnishings firm RH (NYSE:RH) lowered its adjusted net income guidance for the current year from a range of US$65 million to US$80 million, to a range of US$60 million to US$70 million.
The shares plunged by around a quarter as the company unveiled its plan to preserve market share by sacrificing margin.
Canadian outdoor clothing specialist Canada Goose Holdings Inc (NYSE:GOOS), which recently listed on the NYSE, was wanted in early deals, rising 9.4% to US$20.47.
The retailer put in a strong finish to its financial; year, with the fourth quarter seeing a 22% year-on-year increase in revenue.
May non-farm payrolls
The May jobs report was not as healthy as economists had expected, with just 138,000 jobs added in May.
Economists had expected around 180,000 jobs to have been created last month.
The unemployment rate fell to 4.3% from 4.4%, mainly as a result of workers leaving the employment pool rather than any dramatic upturn in hiring patterns.
Following the release of the jobs data, the Dow Jones was expected to open at around 21,156, up on the day but lower than was expected prior to the non-farms payrolls data.
The S&P 500, post-jobs report release, was expected to open a point or so higher at 2,431.
Market preview
US stocks were expected to open firmer ahead of the release of May’s jobs report.
The Dow Jones was tipped to rise 61 points to 21,205 and the S&P 500 was seen opening 5 points to 2,435.
Both values would represent new highs, but take them with a pinch of salt, because the jobs numbers usually move the market.
Economists expect non-farm payrolls to have risen by 185,000 in May, which is about par for the course so far in 2017.