The market is poised to close a very strong week near its highs. The lack of profit taking on Friday might be attributed to a bullish jobs report this morning. The stronger jobs number is fueling a bounce in the dollar. Lately dollar strength has been bearish for the market and commodities but not today. Crude oil is up +0.15% to 86.62 a barrel. Gold futures are up +0.8% to $1,395 an ounce. Silver is up +2.7% and copper is up +1.0%. Bigger picture most of the sector indices are in positive territory led by big gains for the financials. Energy stocks are the exception with nearly all of the energy indices in negative territory but losses are minor.
Overseas the Asian market was in rally mode. The Bank of Japan left interest rates unchanged this morning but the central bank did announce plans to buy REITs with strong credit ratings and stock market ETFs. This sparked some short covering and the Japanese NIKKEI index soared +2.9% for its biggest weekly gain in nearly a year. The Chinese Shanghai index and Hong Kong Hang Seng index both closed up +1.38%. In Europe gains were very mild following yesterday's big rally. Profit taking kept stocks near the flat line. The English FTSE rose +0.05%. The German DAX gained +0.29%. The French CAC-40 was virtually unchanged.
The major report today was the U.S. non-farm payroll data. Economists were expecting a gain of +60,000 jobs with the unemployment level unchanged at 9.6%. This morning the Labor Department announced October saw +151,000 jobs while unemployment was unchanged. The really good news was a +159,000 jump in private sector jobs. August and September's job losses were reduced by 110,000. The government claims average hours worked and average hourly earnings both rose in October. That's a good sign. A rise in hours worked generally precedes any increase in hiring.
Another report today was the Pending Home Sales report. The National Association of Realtors announced that their pending home sales index unexpectedly dropped -1.8% following a +4.4% gain in September.
Some of the big movers today are driven by earnings news in the last 24 hours. Dow-component Kraft Foods (KFT) is down -2.8% and breaking under its 50-dma after reporting earnings last night that were one cent better than expected. Revenues were a miss at $11.86 billion versus the $12.01 billion estimate. KFT's earnings guidance was a little disappointing as well. Starbucks (SBUX) is surging to new multi-year highs (+4.0%) after the company's Thursday night earnings report beat Wall Street's estimates by 5 cents. Revenues rose +17.2% to $2.84 billion, besting estimates, and SBUX said same-store sales rose +8%, which was also better than estimates. Meanwhile Coventry Health (CVH) is up +5.5% to new six-month highs following its earnings report this morning. CVH delivered a profit if $1.25 a share. Analysts are only expecting $0.67. CVH management issued positive earnings guidance going forward.
Financial stocks are some of the best performers today. The banking indices, BIX (+3.6%) and the BKX (+2.3%), are both up sharply in the last three days. There was word this morning that the Federal Reserve could be close to releasing guidelines on whether or not banks can increase their dividends or stock buyback programs depending on the health of the bank. The biggest banks are viewed as the most likely to pass these standards and investors are throwing money at the sector, which has been underperforming the rest of the market for the last several weeks. Bank of America (BAC) is up +3.3% in spite of news that lawyers for a group of investors are demanding BAC buy back their portion of nearly $47 billion in mortgages. The investors claim these mortgages did not meet the necessary underwriting standards while BAC argues the bad loans are due to the economic slowdown.
The S&P 500 index tagged a new two-year intraday high this morning at 1,227. Traders bought the initial bounce at 1220 late this morning. Broken resistance near 1200 should offer some support.
The NASDAQ composite has been trading in a very narrow range on Friday. On a short-term basis we can look for the NASDAQ to fill the gap from Thursday morning. Plus, technical traders can look for very short-term support at the rising 10-dma.
The Dow Industrials are hugging the 11,400 level after yesterday's big surge higher. It looks like the 11,250-11,200 zone could offer some short-term support on a dip.
The small cap Russell 2000 index almost made it to the 740 level this morning but gains are starting to fade. Broken resistance near the 712-715 zone should offer some support.
Chart of the S&P 500:
Chart of the NASDAQ Composite:
Chart of the Dow Jones Industrial Average:
Chart of the Russell 2000 index: