Wall Street heads into next week packing a better than expected February jobs report that has fired up visions of stronger economic recovery that could prove a turning point for equities.
The US Labor Department’s monthly report revealed on Friday that Mother Nature’s wintry blasts were no match for a US economy gaining steam. Stocks soared on the news, forging gains over the week after last week’s losses.
The Dow Jones Industrial Average rose 2.33 percent to close at 10,566.20. It was the first time the blue-chip Dow topped the 10,500-point threshold since January 20.
The technology-rich NASDAQ composite leaped 3.94 percent over the week to 2,326.35, its highest level since September 2008. The broad-market Standard & Poor’s 500 index advanced 3.10 percent to 1,138.70 points.
The market spent much of the past week waiting for the government’s monthly labor market report, largely shrugging off negative news as it braced for the key indicator of economic momentum, which this time delivered a powerful lift to sentiment.
The Labor Department said that nonfarm payrolls fell by 36,000, surprising most analysts who projected 67,000 job losses because of massive snow storms that crippled the country’s northeastern region.
The unemployment rate remained unchanged from 9.7 percent in January, instead of an expected rise to 9.8 percent.
“If this is the kind of jobs report we get with a record blizzard on the East Coast and unusually harsh weather in the Midwest, get ready for a blow-out positive payroll number next month,” said Brian Wesbury at FT Advisors.
Investors got a further boost when the Federal Reserve said consumer credit rose 2.4 percent or US$5 billion in January from December, the first rise since January 2009 and the biggest since July 2008.
“This was seen as a sign that Americans are gaining confidence in the economy. The report also suggested that banks may be more willing to lend money,” Scott Marcouiller at Wells Fargo Advisors said.
The market will find little new economic fuel in the next week to keep the momentum going, which could test the strength of investors’ convictions in the sustainability of the recovery.
The data calendar is relatively light throughout the week until Thursday, when the government reports the January trade balance and weekly initial unemployment claims.
Retail sales is the highlight on Friday, when investors will be looking to see if there is an increase in consumer spending, which accounts for two-thirds of economic activity and is crucial for recovery.
“The January trade balance is expected to widen slightly in response to higher oil prices,” IHS Global Insight economists Brian Bethune and Nigel Gaust said in a client note.
“February retail sales are expected to be close to flat — lower auto sales are expected to be offset by higher sales in other major channels,” they said.
Market action in the week ahead is “difficult to predict” given the dearth of major economic indicators, said Hugh Johnson of Johnson Illington Advisors.
“The mood started to pick up primarily because it looks as though the economy has not been hurt as much by the bad weather as we thought.”
Bonds slumped over the week. The yield on the 10-year Treasury bond rose to 3.682 percent Friday from 3.595 percent a week earlier and that on the 30-year bond climbed to 4.639 percent from 4.529 percent. Bond yields and prices move in opposite directions.
BACK IN THE NEIGHBORHOOD: The planned transit by the ‘Baden-Wuerttemberg’ and the ‘Frankfurt am Main’ would be the German Navy’s first passage since 2002 Two German warships are set to pass through the Taiwan Strait in the middle of this month, becoming the first German naval vessels to do so in 22 years, Der Spiegel reported on Saturday. Reuters last month reported that the warships, the frigate Baden-Wuerttemberg and the replenishment ship Frankfurt am Main, were awaiting orders from Berlin to sail the Strait, prompting a rebuke to Germany from Beijing. Der Spiegel cited unspecified sources as saying Beijing would not be formally notified of the German ships’ passage to emphasize that Berlin views the trip as normal. The German Federal Ministry of Defense declined to comment. While
‘REGRETTABLE’: TPP lawmaker Vivian Huang said that ‘we will continue to support Chairman Ko and defend his innocence’ as he was transferred to a detention facility The Taipei District Court yesterday ruled that Taiwan People’s Party (TPP) Chairman Ko Wen-je (柯文哲) be detained and held incommunicado over alleged corruption dating to his time as mayor of Taipei. The ruling reversed a decision by the court on Monday morning that Ko be released without bail. After prosecutors on Wednesday appealed the Monday decision, the High Court said that Ko had potentially been “actively involved” in the alleged corruption and ordered the district court to hold a second detention hearing. Ko did not speak to reporters upon his arrival at the district court at about 9:10am yesterday to attend a procedural
‘UPHOLDING PEACE’: Taiwan’s foreign minister thanked the US Congress for using a ‘creative and effective way’ to deter Chinese military aggression toward the nation The US House of Representatives on Monday passed the Taiwan Conflict Deterrence Act, aimed at deterring Chinese aggression toward Taiwan by threatening to publish information about Chinese Communist Party (CCP) officials’ “illicit” financial assets if Beijing were to attack. The act would also “restrict financial services for certain immediate family of such officials,” the text of the legislation says. The bill was introduced in January last year by US representatives French Hill and Brad Sherman. After remarks from several members, it passed unanimously. “If China chooses to attack the free people of Taiwan, [the bill] requires the Treasury secretary to publish the illicit
The Executive Yuan yesterday warned against traveling to or doing business in China after reports that Beijing is recruiting Taiwanese to help conceal the use of forced Uighur labor. The government is aware that Taiwan-based influencers and businesses are being asked to make pro-Beijing content and offered incentives to invest in the region, Executive Yuan acting spokeswoman Julia Hsieh (謝子涵) told a news conference. Taiwanese are urged to be aware of the potential personal and reputational harm by visiting or operating businesses in China, Hsieh said, adding that agencies are fully apprised of the situation. A national security official said that former Mainland