Friday, December 5, 2014

Another Strong Day In The Markets

U.S. stocks rose on Friday, lifting benchmarks into uncharted terrain, as investors embraced a stronger-than-forecast November payrolls report as backing the view the economy can handle rate hikes by the Federal Reserve in 2015.

U.S. employers created 321,000 jobs last month, the largest gain since January 2012, and topped the most cheery estimates. The unemployment rate remained unchanged at a six-year low of 5.8 percent, and hourly earnings increased 0.4 percent.

Stock-index futures reversed direction several times in the wake of the data, and benchmark Treasury yields shot higher.

The initial reaction in equities is the market's "futile attempt to say this means the Fed is going to move earlier, and you should see yields trending higher in an improving economy," said Art Hogan, chief market strategist at Wunderlich Securities, referring to the notion that the report could move up the timing of Fed's rate increases.

Another report Friday had orders for U.S. factory goods falling 0.7 percent in October.

After a 91-point advance lifted it to a intraday record and within 9 points of the psychological milestone of 18,000, the Dow Jones Industrial Average gained 58.69 points, or 0.3 percent, to 17,958.79, with JPMorgan Chase and Goldman Sachs Group leading blue-chip gains that included 20 of 30 components.

Also climbing to a record, the S&P 500 advanced 3.45 points, or 0.2 percent, to 2,075.37, with financials pacing sector gains, as higher interest rates would boost bank earnings, and energy performed most poorly among its 10 major industry groups.

The Nasdaq added 11.32 points, or 0.2 percent, to 4,780.56.

The CBOE Volatility Index, a measure of investor uncertainty, fell 4.4 percent to 11.84.  Remember when it was over 20 and I suggested buying puts?  Hope you listened.

For every seven shares that fell, eight rose on on the New York Stock Exchange, where nearly 755 million shares traded. Composite volume approached 3.4 billion.

The yield on the 10 year Treasury note used to figure mortgage rates and other consumer loans rose 7 basis points to 2.3021 percent, and the U.S. dollar rose against the currencies of major U.S. trading partners, hitting a seven-year high against the Japanese yen.

Dollar-denominated commodities including oil and gold fell, with crude futures for January delivery falling 97 cents, or 1.5 percent, to a five-year low of $65.84 a barrel and gold futures for February dropping $17.30, or 1.4 percent, to $1,190.40 an ounce.

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