By Anora Mahmudova and Sara Sjolin, MarketWatch
Economy adds 257,000 jobs in January
NEW YORK (MarketWatch) -- U.S. stocks moved higher on Friday on
the back of a strong jobs report that signaled gathering momentum
in the labor market, shifting the markets thinking to the timing of
the Federal Reserve's first rate hike.
The Labor Department report showed that the economy added
257,000 jobs in January, while November and December numbers were
revised sharply higher. Another good sign, hourly wages jumped
0.5%. Although the unemployment rate ticked up to 5.7% from 5.6%,
it suggests that more people are entering the workforce. The U.S.
economy added more than 200,000 jobs for 12 straight months.
The main indexes were set to book solid weekly gains. The
S&P 500 (SPX) gained 0.5% to 2,072, with eight of its 10 main
sectors trading higher. Financials and telecoms were leading the
gains.
The Dow Jones Industrial Average (DJI) was modestly higher with
nearly 24 of its 30 members trading higher. JPMorgan Chase & Co
was the top gainer among the blue-chips.
The Nasdaq Composite (RIXF) also moved higher.
Steven Wieting, global chief investment strategist at Citi
Private Bank, said consistently higher job gains do not justify
rates at zero.
"We have now had four years of 200,000 job gains on average and
the latest trend suggest we have capacity to grow to absorb
population growth. Zero interest rates are not appropriate at this
juncture," Wieting said.
"While impending rate hikes, and we believe the Fed will raise
rates this year, bring volatility to the stock market, ultimately,
earnings growth and increased consumer spending, will drive markets
higher. The continued strength of the dollar will make U.S.
equities attractive to international investors, bringing in
investments," he added.
Nonfarm frenzy: After a week focused on earnings, deals and
Greece's tumultuous debt negotiations, attention has shifted back
to hard economic numbers and earnings.
Before the jobs report, markets expected the first rate hike by
December, but a robust report brought forward expectations to
September, judging by the price of Fed funds rate futures, a widely
used yardstick for measuring the market's rate-hike
expectations.
Jon Hilsenrath, chief economics correspondent for The Wall
Street Journal wrote that the strong jobs report keeps open the
possibility the Federal Reserve could start rasing short-term
interest rates in June.
The dollar rallied, with the dollar index (DXY) jumping 1%,
while 10-year Treasury yields rose 11 basis points to 1.94%
following the jobs report.
The Fed policy committee is scheduled to meet on March 17-18,
with some analysts expecting a change in the tone of its monetary
policy statement.
Fed speakers: Atlanta Fed President Dennis Lockhart, a voting
member of the Federal Open Market Committee, will speak on the
economy to Southwest Florida Business Leaders at 12:45 p.m. Eastern
Time.
Friday earnings: Moody's Corp. (MCO) jumped reported
fourth-quarter earnings of $1.12 a share, beating a consensus
estimate gathered from a FactSet survey.
Madison Square Garden Co.(MSGNV) shares also rose after beating
on fourth-quarter earnings.
CBOE Holdings Inc. (CBOE) dropped as it reported earnings
slightly lower than expectations.
Movers and shakers: Twitter Inc. (TWTR) surged 16% after the
social-media company reported adjusted fourth-quarter earnings
ahead of analyst expectations.
LinkedIn Corp. (LNKD) jumped 14%, after the social-networking
company beat expectations for the fourth quarter.
GoPro Inc. (GPRO), on the other hand, slumped 11% after the
maker of wearable video cameras posted results that easily beat
expectations late Thursday, but then warned on the upcoming quarter
and that its chief operating officer had resigned.
Pandora Media Inc. (P) sank 18% after the music-streaming
service late Thursday reported fourth-quarter results where revenue
and the 2015 outlook missed expectations.
Online travel-services provider Expedia Inc. (EXPE) reported a
drop in fourth-quarter earnings late Thursday, sending the shares
11% lower.
Harris Corp. (HRS) and Exelis Inc. (XLS) said they have entered
into a definitive agreement, where Harris will buy the aerospace
and defense firm in a cash-and-stock deal valued at $23.75 per
share, or an approximately $4.75 billion enterprise value. Shares
of Exelis soared 35% and Harris jumped 7.5%.
Other markets: Oil futures continued to climb, setting the March
crude contract (CLH5) on track for an 6.9% weekly advance. Metals
(GCJ5) were mixed, while the dollar (DXY) fell against most major
currencies.
Markets in Europe were hit by ongoing jitters about Greece's
bailout program, after a Thursday meeting between Finance Minister
Yanis Varoufakis and his German counterpart Wolfgang Schäuble
showed the two sides are far from reaching a debt deal. Asian
markets closed mixed.
Read: Greece and Germany can't even agree to disagree
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