Dow Jones and S&P 500 close at new highs
Technology rally runs out of steam
The Dow Jones Average and S&P 500 indexes closed at record highs, helped by a pick-me-up from November's jobs data.
The Dow Jones closed at 24,329, up 118, while the S&P 500 advanced 14.5 points to 2,651.5.
The tech-heavy Nasdaq Composite fared slightly less well, climbing 27 to 6,840, despite index heavyweight Apple Inc (NASDAQ:AAPL) reportedly putting British designer Jony Ive back in charge of the design team; Ive designed the original iMac, the first iPod and the iPad.
US non-farm payrolls in November rose 228,000, versus expectations of a 200,000 increase.
The unemployment rate remained unchanged at 4.1%.
Sentiment was also boosted by both the Senate and the House of Representatives approving a two-week funding bill to head off the prospect of a government shut-down this weekend.
In Canada, the S&P TSX Composite closed at 16,096, up 80.
1.00pm: Jobs report puts winds in the sails of the benchmarks
US stocks had a good morning session on the back of a strong jobs report and a renewed appetite for technology stocks.
The Dow Jones Average was up 84 at 24,295; the broader-based S&P 500 was up 13 at 2,650, and the tech-heavy Nasdaq Composite surged 42 points to 6,855.
Across the border in Canada, the S&P TSX Composite index was up 88 at 16,103.
“November jobs were up 228,000 and up 170,000 on average over the last three months. Gains were broad based in service, manufacturing and construction sectors while wage growth remained modest,” noted Wells Fargo Economics Group in its commentary on the non-farm payrolls.
“Nominal average hourly earnings rose 0.2 percent in November, which was short of expectations; however, the average length of the workweek edged up to 34.5 hours. Along with the net jobs added, this suggests income derived from the labor market has strengthened at a 4.7 percent annualized rate the past three months,” it added.
In company news, Cancer Genetics Inc (NASDAQ:CGIX) took a tumble, shedding more than a fifth of its value at US$1.825 after it priced its direct offering of stock units at two dollars pop.
The molecular markers and cancer diagnostics specialist intends to raise US$7mln through the issue.
10.00am: November jobs figures surprise to the upside
Pepped up by better-than-expects jobs data for November, US stocks opened on the front foot.
The Dow Jones 30-share average was up 63 at 24,276 and the S&P 500 was 11 points better at 2,648.
If the non-farm payrolls numbers for November were encouraging, some pundits thought US wage growth was on the disappointing side.
“Hurricanes continue to distort the jobs numbers, but with the economy flying, a disappointing wage figure is unlikely to knock the Fed off-course,” suggested James Smith, an economist at finance house ING.
“For markets, a further disappointment in wage growth will be the key takeaway from today's data. November's growth in average hourly earnings came in below consensus at 0.2%, following a downward revision to October's figure, although it's still probably worth taking these numbers with a pinch of salt. Back in September, the job losses from the hurricanes were highly concentrated in low-wage sectors, and taking them temporarily out of the sample artificially boosted the average level of pay. November's disappointment could simply be a further correction to this blip,” he added.
“A similar logic can probably be applied to the payrolls numbers. On the face of it, a 228,000 increase in jobs during November looks good, but at least some of this is probably down to people returning to work after the disruption. Either way though, policy-makers are less bothered by jobs growth these days - they know that the rate of employment growth should be expected to slow as the remaining slack in the economy erodes.” Smith said.
Looking at corporate announcements, Sigma Designs Inc (NASDAQ:SIGM) shot up 23% to US$6.875 in the wake of last night's announcement of an agreed bid from Silicon Laboratories (NASDAQ:SLAB).
Silicon Labs is offering US$7.05 a share in a deal that values Sigma at roughly US$282mln.
Pre-open
US non-farm payrolls in November rose 228,000, versus expectations of a 200,000 increase.
The unemployment rate remained unchanged at 4.1%.
The numbers should give a boost to President Trump and stock market sentiment.
“At a time when Donald Trump’s embattled presidency is being shaken by its roots, job creation - a cornerstone of his campaign - remains firmly in place, according to the latest non-farm payroll figures,” commented Dennis de Jong, the managing director of forex trading platform UFX.
“Having delivered job growth of 244,000 in in October, today’s data added a further 228,000 to that figure, while unemployment held steady at 4.1%.
“Echoing the recent strength in industrial growth, manufacturing jobs continue to surge, even as the service sector continues to take its foot off the pedal.
“An accompanying pick-up in wages, however, could also prove a portent of higher inflation, with taller interest rates surely on the horizon over the coming months,” de Jong suggested.
As David Morrison, senior market strategist at GKFX observed, attention now moves on to how this data will influence next week's meeting of the Federal Reserve's policy-making committee, the FOMC.
“Back in September the dot plot indicated that the Fed would raise rates by an additional 75 basis points in 2018; however, some analysts believe that with growth picking up and inflation likely to follow the central bank may favour tightening monetary policy by an additional 25 basis points next year – a potential increase of 100 basis points. If that’s the case then it may add to speculation that the yield curve could turn negative – an event which has previously preceded a recession in the US,” Morrison noted.
Earnings rose 0.2% in November and were up 2.5% year-on-year.
On the corporate front, broker comment was expected to give a lift to vehicles manufacturer General Motors Company (NYSE:GM) and sportswear manufacturer Nike Inc (NYSE:INC).
Broker Piper Jaffray has kicked the tires of most of the car makers and reckons General Motors is “very cheap” compared to its peers.
As for Nike, broker Guggenheim lifted its outlook ahead of the company fiscal second quarter earnings update expected this month.
Shares in GM were up 0.4% in pre-market trading while Nike legged it 0.3% higher.