Stock Market News for May 08, 2017

Benchmarks finished in the green on Friday following the release of better than expected April jobs data. Moreover, energy shares surged as oil prices recovered. Meanwhile, investors also kept a close watch on the outcome of the final-round of the presidential election in France.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.

The Dow Jones Industrial Average (DJI) advanced 0.3% to close at 21,006.94, marking its first close above the 21,000 mark since March. The S&P 500 rose 0.4% to a record close of 2,399.29 since March 1. The tech-laden Nasdaq Composite Index gained 0.4% to close at 6,100.76. The fear-gauge CBOE Volatility Index (VIX) closed at 10.46. Advancers outnumbered declining stocks on the NYSE by a 2.01 to 1 ratio.  

Nonfarm Payroll Data

Investors digested the report released by U.S. Bureau of Labor Statistics on Friday which showed an increase of 211,000 jobs in April, higher than what was expected. The strong payroll growth number was attributable to increase in jobs in leisure and hospitality, health care and social assistance, financial activities, and mining sectors.

There was an increase of 55,000 jobs in leisure and hospitality sector, whereas, health care and social assistance sector added 37,000 jobs last month. Social assistance sector saw an increase of 17,000 jobs, with all of the gain coming from individual and family services. Financial activities added another 19,000 jobs, where insurance carriers and related activities contributed most of the gain. Moreover, employment in mining sector saw an increase of 9,000 jobs, with most of the gains coming from support activities for mining.

Meanwhile, unemployment rate declined marginally from 4.5% to 4.4% in April, marking its lowest level since May 2007. The number of unemployed persons was 7.1 million, in April. The unemployment rate fell by 0.6%, and the number of unemployed declined by 854,000, over the year. The "U-6" is considered to be a broader measure of the unemployment as it includes those workers who are working part-time for purely economic reasons. U6 unemployment declined to 8.6%.

Payrolls data also showed that the hourly pay rose 2.5% over the last twelve months. In April, average hourly wages for all employees on private nonfarm payrolls increased by 7 cents to $26.19. Additionally, the labor force participation rate for April changed little and held steady at 62.9%.

Oil Prices Gain

Oil prices gained on Friday recovering from five-month lows following Saudi Arabia’s statement that Russia has agreed to join OPEC in extending oil supply cuts. OPEC and non-OPEC members including Russia agreed to reduce production by 1.8 million barrels per day for the first half of the year.

WTI crude prices gained by $0.70, or 1.5%, to $46.22 a barrel. The broader Energy Select Sector SPDR (XLE) advanced 1.6%, emerging as the best performing sector of S&P 500. Some of the key holdings of the energy sector in the S&P 500 including EOG Resources EOG, ConocoPhillips COP and Occidental Petroleum OXY gained by 2.6%, 1.9% and 4.1% respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

French Presidential Election

Investors remained focused on the final-round of the presidential election in France. The outcome of the final round of the contest between Marine Le Pen and Macron will have a major bearing on the future of the European Union.

In the first round of the French presidential election, Macron won with 23.9% of the vote, compared to his closest competitor, euro skeptic candidate Marine Le Pen, who secured 21.4% of the vote. The market expects centrist Emmanuel Macron to beat far-right candidate Marine Le Pen.

Weekly Results

For the week, the Nasdaq, S&P 500 and Dow advanced 0.9%, 0.6% and 0.3% respectively. Some of the top companies continued to post strong performances in the earnings season. Consumer spending remained unchanged in March, whereas personal income increased $40.0 billion or 0.2% in March.

Meanwhile, U.S. auto industry reported disappointing sales in April, with sales hitting 16.88 million, below an expected annual rate of 17.2 million. The trade deficit in March decreased to $43.7 billion, declined $0.1 billion from $43.8 billion in February.

Stocks that made Headlines

Telephone & Data Systems Tops Q1 Earnings and Revenues

Telephone & Data Systems Inc. TDS reported strong financial results in the first quarter of 2017, wherein both the top line and bottom line outpaced the Zacks Consensus Estimate. (Read More)

United States Cellular Q1 Earnings Top, Revenues Lag

United States Cellular Corp. USM   – a subsidiary of Telephone & Data Systems Inc. – posted mixed financial results in the first quarter of 2017. (Read More)

Berkshire Hathaway Q1 Earnings Miss, Decrease Y/Y

Berkshire Hathaway Inc.’s BRK.B  first-quarter 2017 operating earnings of $1.44 per share missed the Zacks Consensus Estimate by 15.8%. (Read More)

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Telephone and Data Systems, Inc. (TDS): Free Stock Analysis Report
 
Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis Report
 
EOG Resources, Inc. (EOG): Free Stock Analysis Report
 
ConocoPhillips (COP): Free Stock Analysis Report
 
Occidental Petroleum Corporation (OXY): Free Stock Analysis Report
 
United States Cellular Corporation (USM): Free Stock Analysis Report
 
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