Investors Cheer Labor Report…..

U.S. equities finished out the week on an up note, courtesy of the April labor report that showed nonfarm payrolls were above forecasts, the unemployment rate surprisingly fell and wages continued to move higher. However, the ISM non-Manufacturing Index unexpectedly showed growth in the key services sector slowed. Treasury yields were lower, as was the U.S. dollar, while gold and crude oil prices gained ground. In earnings news, Activision Blizzard disappointed the Street with its guidance, while Monster Beverage and Weight Watchers posted upbeat quarterly results.

The Dow Jones Industrial Average (DJIA) rose 197 points (0.8%) to 26,505, the S&P 500 Index was up 28 points (1.0%) to 2,945, and the NASDAQ Composite increased 127 points (1.6%) to 8,164. In moderate volume, 783 million shares were traded on the NYSE and 2.0 billion shares changed hands on the NASSAQ WTI crude oil gained $0.13 to $61.94 per barrel and wholesale gasoline was up $0.01 at $2.03 per gallon. Elsewhere, the Bloomberg gold spot price increased $8.07 to $1,278.76 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was down 0.4% at 97.48. Markets were mixed for the week, as the DJIA fell 0.2%, while the S&P 500 Index and the NASDAQ Composite rose 0.2%.

Nonfarm payrolls rose by 263,000 jobs month-over-month (m/m) in April, compared to the Bloomberg forecast of a 190,000 increase. The rise of 196,000 seen in March was revised to a gain of 189,000 jobs. Excluding government hiring and firing, private sector payrolls increased by 236,000, versus the forecasted gain of 188,000, after rising by 179,000 in March, revised from the 182,000 increase that was initially reported. Notable job gains occurred in professional and business services, construction, health care, and social assistance.

The unemployment rate fell to 3.6%—the lowest since 1969—versus estimates calling for it to remain at 3.8%, as the labor force participation rate declined to 62.8% from 63.0%. Average hourly earnings were up 0.2% m/m, below projections of a 0.3% gain and matching March’s upwardly-revised increase. Y/Y, wage gains were 3.2% higher, south of estimates of 3.3% and in line with March’s gain. Finally, average weekly hours dipped to 34.4 from March’s unrevised 34.5 rate, where it was expected to remain.

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