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Stock Market News for July 8, 2011

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On Thursday, positive jobs and retail reports lifted invested sentiment and subsequently boosted the benchmarks which edged closer to 2011 highs. Nonetheless, volumes remained tight as investors anxiously await crucial non-farm payroll data from the government.

The Dow Jones Industrial Average (:DJIA) gained 0.7% to finish at 12,719.49. The Standard & Poor 500 (S&P 500) surged 1.1% to settle at 1,353.22. The Nasdaq Composite Index was up 1.4% to close at 2,872.66. Volumes remained tight as on the York Stock Exchange, AMEX and Nasdaq, only 6.69 billion shares were traded compared with last year's daily average of 8.47 billion. On the NYSE, only 2.2 billion shares were traded and for four advancing stocks, only one declined.

The Dow has now gained 6.6% over its last eight trading days and is 100 points away from its April closing high. The S&P 500 ticked up 6.7% over the same period and it is the index’s highest increase since September 2010. The Nasdaq has gained 8.3% over its last eight trading days, which is also the best percentage gain in two years. Additionally, only three out of the 30 Dow components, namely International Business Machines Corp. (NYSE:IBM), Pfizer Inc. (NYSE:PFE) and Verizon Communications Inc. (NYSE:VZ), settled in the negative zone and they lost 0.7%, 2.7% and 0.3%, respectively.

None of the 10 industry groups in the S&P declined and the materials sectors led the gains. Among the gainers for the materials sector were Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), Southern Copper Corp. (NYSE:SCCO), General Moly, Inc. (AMEX:GMO), Western Copper Corp. (AMEX:WRN) and Cliffs Natural Resources Inc. (NYSE:CLF) and they jumped 3.7%, 3.8%, 3.4%, 7.7% and 2.1%, respectively. Meanwhile, the price of copper increased 2.4% to hit the highest level in nearly three months.

Separately, the S&P Retail Index (:RLX) surged to hit an all-time high boosted by a stronger than expected jump in sales of key retailers for the month of June. Retailers like Macy's, Inc. (NYSE:M), Costco Wholesale Corporation (NASDAQ:COST), Target Corp. (NYSE:TGT) and Saks Incorporated (NYSE:SKS) were among the ones to deliver positive news.

It is the jobs market that largely depicts the condition of the economy and the past several reports had a gloomy tale to narrate. This time around, both the Automatic Data Processing (NasdaqGS:ADP - News) and the Labor Department rang in the cheer for the economy after posting favorable reports.

The ADP National Employment Report said employment in the non-farm private business sector had soared by 157,000 from May to June on a seasonally adjusted basis, almost double of what economists had expected. The report stated: “Today’s ADP National Employment Report estimates employment in the service-providing sector rose by 130,000 in June, nearly three times faster than in May, marking 18 consecutive months of employment gains. Employment in the goods-producing sector rose 27,000 in June, more than reversing the decline of 10,000 in May. Manufacturing employment rose 24,000 in June, which has seen growth in seven of the past eight months.

To add to the cheer, the US Department of Labor reported seasonally adjusted initial claims for the week ending July 2 had declined by 14,000 to 418,000 from the previous week's revised figure of 432,000. This was better than the decline of 4,000 that had been widely expected. Further, it reported: “The advance seasonally adjusted insured unemployment rate was 2.9 percent for the week ending June 25, a decrease of 0.1 percentage point from the prior week's revised rate of 3.0 percent. All eyes will now be fixed on the government's non-farm payrolls report for June that is slated for release on Friday.

Separately, crude oil prices for August delivery moved near the $100 per barrel mark, settling at $98.69 on Thursday. The Energy Select Sector SPDR (NYSEArca:XLE - News) fund jumped 1.5% and stocks like Chevron Corp. (NYSE:CVX), BP plc (NYSE:BP), Hess Corporation (NYSE:HES) and Petroleo Brasileiro (NYSE:PBR) jumped 1.4%, 1.4%, 1.7% and 1.9%, respectively. However, inflating crude prices are almost never favorable for the economy as increasing crude prices inflates transportation prices and consumer prices significantly. This had been the case earlier during this year when violence in the Persian Gulf and the Japanese nuclear crisis had led to crude prices shooting up, which subsequently heavily dented the markets.

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