Fundamentals

U.S. Stocks Rise on Better-Than-Expected Non-Farm Payrolls

U.S. Session Key Developments

Labor Department Reports Payrolls Dropped By 36,000 in February

Consumer Credit Unexpectedly Rises in January

Investors Sell Off US Dollar, Crude Gains 2 Percent

U.S. Equities are on track to test January highs after a better-than-expected non-farm payrolls report sent stocks higher.  The Labor Department reported that payrolls dropped by 36,000 in February, compared with a decrease of 68,000 estimated in a Bloomberg survey.  Economists had expected that the severe weather had kept job hunters at home and kept businesses from hiring.  The report showed that 1 million Americans said bad weather prevented them from getting to work during the survey week.  Nonetheless, the unemployment rate held at 9.7 percent in the face of all the snow, suggesting that March could see the first significant rise in payrolls.  On the other hand, the underemployment rate – which includes part-time workers who’d prefer a full-time position and people who want work but have given up looking – rose to 16.8 percent from 16.5 percent.  Gains in employment are pivotal to a sustainable economic recovery.  The greenback faltered despite the employment surprise due to its “safe-haven” status.  The dollar index finished the session at 80.44, 0.2 percent lower from yesterday’s close.  The dollar was lower against all G7 currencies except the Japanese Yen, which fell 1.4 percent to 90.29 against the dollar.  Commodities gained on the dollar’s weakness and the newfound confidence in the strength of the economic recovery.  The CRB Commodity Index was up 0.8 percent at the end of the session.  Crude oil provided major strength, gaining 2.0 percent to $82.09.

DJIA 30                  10,566.20                    +122.06                       +1.17%
The Dow Jones Industrial Average closed the first week of March back in the black for 2010 and on the verge of testing its January 19 high of 10725.  Overall, only two components of the index declined in today’s session as shares of Boeing and American Express paced all advancing issues.  Both companies advanced at least 3.4 percent and contributed a combined 28 points to the Dow’s advance.  Alcoa was the third best performer as metal prices gained 0.7 percent in today’s commodity rally.  Alcoa closed up 3.1 percent.

S&P 500                     1,138.70                      +15.73                         +1.40%
The Standard and Poor’s 500 Index gained for the sixth consecutive trading day.  All industry groups were in the black as 19 out of 20 components advanced overall.  All 82 Financial issues were higher today as the group gained 2.0 percent to lead all sectors.  Bank lending to consumers unexpectedly increased in January for the first time in a year.  Consumer credit rose by $5.0 billion compared to the $4.5 billion drop anticipated by economists surveyed by Bloomberg.  American International Group was the best performer among financial companies.  The bailed-out insurer rose 5.1 percent after it announced it would sell its remaining stake in Transatlantic Holdings, valued at close to $500 million.

NASDAQ                   2,326.35                      +34.04                         +1.48%
The tech heavy Nasdaq Composite was the best performer among the three main U.S. equity indices.  Basic materials stocks led all industry groups higher, gaining 2.65 percent amid major gains in commodity prices.  Technology shares, which hold the most weight by far, gained 1.3 percent.  Apple contributed the most to the sector’s advance.  The maker of iPods gained 3.9 percent to close at $218.99.  The company climbed to a record intraday price of $219.70 after they announced they would start selling the iPad in the U.S. on April 3 and will take preorders next week.

Written by Gary Chalik, CFDTrading Research
Please send any comments about this report to GChalik@fxcm.com