4:15 pm : Stocks surged on Friday following a better than expected employment report. The S&P finished at a new all-time closing high while the Nasdaq finished at its highest level since February, 2001. The Dow was on pace for a record close, but some profit taking in the final 20 minutes caused it to close roughly 30 points below its highest level.
September nonfarm payrolls, as reported by the Dept. of Labor rose 110,000, slightly larger than the gain of 100,000 that had been expected. Perhaps more significantly, the 4,000 decline previously reported for August that had caused so much angst was revised sharply higher to an increase of 89,000.
Payroll increases of 100,000 per month represent a 1% annual growth rate. That is below the trend in periods of strong economic growth in previous years when labor force participation was rising, but it is still reasonably solid.
Average hourly earnings rose 0.4%. This was a bit more than expected and follows a 0.3% August increase. The unemployment rate is at a low 4.7%.
These numbers don't show significant weakness in any respect. Briefing.com believes there is no reason for the Fed to ease rates based on these data. This employment report should greatly ease recession fears which means it is moderately bullish for the stock market.
Earnings warnings from Washington Mutual (WM 36.07, +0.79) and Merrill Lynch (MER 76.70, +1.92) were not enough to prevent the financial sector (+1.4%) from outperforming. Both companies stated that third quarter earnings will take a big hit due to the credit market turmoil. Merrill Lynch expects to report a net loss per diluted share of up to $0.50.
The consumer discretionary
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