Stocks Turn In Lackluster Performance Despite Upbeat Jobs Data - U.S. Commentary

(RTTNews) - After failing to sustain an initial upward move, stocks turned in a lackluster performance over the course of the trading day on Friday. The choppy trading came despite the release of a relatively upbeat monthly employment report.

The major averages eventually closed mixed for the third consecutive session. While the Nasdaq dipped 15.90 points or 0.4 percent to 4,336.22, the Dow rose 30.83 points or 0.2 percent to 16,452.72 and the S&P 500 crept up 1.01 points or 0.1 percent to 1,878.04.

Nonetheless, the major averages all moved higher for the week due to the substantial rally seen on Tuesday. The S&P 500 jumped by 1 percent, while the Dow and the Nasdaq advanced by 0.8 percent and 0.7 percent, respectively.

While buying interest was initially generated by a report from the Labor Department showing stronger than expected job growth in the month of February, stocks were unable to sustain the early upward move.

The report suggested that the labor market held up relatively well in February despite severe winter weather, but traders seemed to question whether the data supports any further upside for the markets.

The major averages have moved steadily higher throughout much of the past month, with the S&P 500 reaching new record highs. The Nasdaq has also reached its best levels in almost fourteen years.

The report from the Labor Department showed that non-farm payroll employment rose by 175,000 jobs in February compared to economist estimates for an increase of about 150,000 jobs.

Additionally, the report showed a net upward revision to the two previous months of 25,000 jobs, with employment in December and January rising by 84,000 jobs and 129,000 jobs, respectively.

Despite the continued job growth, the unemployment rate edged up to 6.7 percent in February after dipping to a five-year low of 6.6 percent in January. The unemployment rate had been expected to come in unchanged.

Meanwhile, the Labor Department also said average hourly earnings rose 0.4 percent in February, representing the strongest monthly growth since June of last year.

James Knightley, an economist at ING Bank, said, "With more people in work and these workers earning more money it should be good news for consumer spending and confidence and help cement expectations for ongoing Fed asset purchase tapering."

The jobs report overshadowed a separate report from the Commerce Department showing that the U.S. trade deficit edged slightly wider in the month of January.

Sector News

Precious metal stocks saw considerable weakness on the day, dragging the Philadelphia Gold/Silver Sector Index down by 2.4 percent. NovaGold (NG) and Freeport-McMoRan (FCX) turned in two of the sector's worst performances.

A decrease by the price of gold contributed to the weakness in the sector, with gold for April delivery falling $13.60 to $1,338.20 an ounce.

Significant weakness was also visible among steel stocks, as reflected by the 2 percent loss posted by the NYSE Arca Steel Index. With the drop, the index pulled back toward the one-month closing low it set on Monday.

Computer hardware, software, and commercial real estate stocks also came under pressure on the day, while most of the other major sectors showed only modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index advanced by 0.9 percent, while Hong Kong's Hang Seng Index edged down by 0.2 percent.

Meanwhile, the major European markets came under considerable pressure on the day. While the German DAX Index tumbled by 2 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index fell by 1.2 percent and 1.1 percent, respectively.

In the bond market, treasuries moved notably lower on the heels of the upbeat jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 5.3 percent to 2.79 percent, its highest closing level in over a month.

Looking Ahead

Following the slew of economic data released over the past week, the economic calendar for next week is relatively quiet. Trading could still be impacted by the release of reports on retail sales, producer prices, and consumer sentiment.