Stocks Higher After Jobs Data; Dow Rises Above 17,000

Morningstar

U.S. Market
Stocks were higher today, with the Dow rising above 17,000 for the first time, after upbeat economic data.

The U.S. economy added 288,000 jobs in June, well above the 215,000 jobs expected by economist. Payroll numbers for April and May were also revised up to 304,000 and 224,000 respectively. The unemployment rate fell to 6.1% from 6.3% in the previous month. Hourly earnings rose 6 cents to $24.45.

In other jobs news, initial unemployment claims rose 2,000 to 315,000 last week. The less volatile four-week moving average rose by 500 to 313,000. Separately, Challenger, Grey and Christmas said that planned layoffs fell in June to 31,000 from 53,000 in May.

The U.S. trade deficit narrowed by 5.6% to $44.39 billion in May. Exports were up 1% while imports fell 0.3%. The strong export reading was driven by exports of cars, consumer goods and petroleum.

The ISM non-manufacturing index, which measures the strength of the service sector, fell to 56.0 in June from in 56.3 in May. The decline was in line with expectations. Any reading over 50 indicates an expansion in the services sector.

At midday the Dow and Nasdaq were each up 0.5% while the S&P 500 was 0.4% higher.

Stocks on the Move
PetSmart’s (PETM) shares shot up over 12% this morning after Jana Partners LLC, a $10 billion hedge fund, disclosed that it has accumulated a 9.9% stake in the firm. In the SC13D filing, Jana announced that it will discuss with PetSmart’s board the potential to (1) improve operating performance; (2) alter PetSmart’s capital structure to return more capital to shareholders; and/or (3) explore the sale of the company (most likely to private equity).

International Speedway (ISCA) seems to finally be experiencing the benefit of improving consumer confidence. The second quarter was mostly positive, with ticket prices rising 2% but attendance weaker at some races (because of weather) and positive at other races (particularly Kansas and California). Early indications of third-quarter race performance were promising, with Michigan deemed well and the Coke Zero 400 and Watkins Glen on track with expectations. Management left its full-year outlook unchanged. Shares were up 2% at midday.

Foreign Markets
European markets rose today after ECB head Mario Draghi indicated that quantitative easing in the eurozone remains on the table. In late trading, the FTSE 100, Paris CAC and Germany’s DAX were up 0.7%, 1.0% and 1.2% respectively.

Asian shares were mixed on the day. The Shanghai Composite was up 0.2% while the Nikkei 225 and Hang Seng were each down 0.1%.

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