Stocks End on High Note, Despite Disappointing Jobs Report…..

U.S. equities finished out a choppy week in the plus column, with Information Technology stocks lending support in today’s session, but weakness in tech issues early in the week left the Nasdaq as the lone major index to not post a gain on a weekly basis. Investors seemed to somewhat shrug off a much softer-than-expected read on April employment growth, as the report seems to be suggesting the recovery is taking longer than many economists were estimating, easing concerns about the Fed reining in its extremely accommodative monetary policy. Treasuries initially rose on the jobs report, which applied some downside pressure on yields, but bond prices finished mixed. The U.S. dollar was decisively lower, continuing to give back all of Q1’s rally, and crude oil prices saw only modest gains, while gold was solidly higher. Earnings results continued to pour in to close out the week, with reports from Beyond Meat, Peloton Interactive and Cigna fostering mixed reactions. Europe saw widespread gains, bolstered by strong earnings and economic data, while Asia finished mixed before the release of the U.S. jobs report and amid some upbeat data in the region.

The Dow Jones Industrial Average rose 229 points (0.7%) to 34,778, the S&P 500 Index increased 31 points (0.7%) to 4,233, and the Nasdaq Composite advanced 119 points (0.9%) to 13,752. In moderate volume, 871 million shares were traded on the NYSE and 4.3 billion shares changed hands on the Nasdaq. WTI crude oil ticked $0.19 higher to $64.90 per barrel. Elsewhere, the Bloomberg gold spot price gained $16.60 to $1,831.32 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—fell 0.8% to 90.21. Markets were mixed for the week, as the DJIA jumped 2.7%, the S&P 500 was up 1.2%, while the Nasdaq Composite declined 1.5%.

April nonfarm payroll report misses noticeably…..

Nonfarm payrolls rose by 266,000 jobs month-over-month (m/m) in April, compared to the Bloomberg consensus estimate of a 1,000,000 increase, and following March’s downwardly adjusted gain of 770,000, from the initial report of a 916,000 rise. Excluding government hiring and firing, private sector payrolls increased by 218,000, versus the forecasted rise of 933,000 after increasing by a negatively revised 708,000 in March. The labor force participation rate rose to 61.7% from March’s 61.5% rate and compared to forecasts of 61.6%. The U.S. Department of Labor said notable job gains were seen in leisure and hospitality, other services, and local government education, partially offset by employment declines in temporary help services and in couriers and messengers.

The unemployment rate increased to 6.1% from March’s 6.0% rate, versus forecasts calling for a decline to 5.8%. The underemployment rate—including total unemployed and those employed part time for economic reasons, along with people who are marginally attached to the labor force—declined to 10.4% from the prior month’s 10.7% rate. Average hourly earnings rose 0.7% m/m, above projections of a flat reading and versus March’s unrevised 0.1% decrease. Y/Y, wages were 0.3% higher, versus estimates of a 0.4% decline. Finally, average weekly hours ticked higher to 35.0 from March’s unrevised 34.9 rate, where it was expected to remain.

March wholesale inventories (chart) were revised slightly lower to a 1.3% m/m gain, versus expectations to be unrevised at the preliminary estimate of a 1.4% increase and compared to February’s upwardly revised 1.0% gain. Sales jumped 4.6% m/m after February’s positively revised flat reading.

Consumer credit, released in the final hour of trading, showed consumer borrowing expanded by $25.8 billion during March, more than the $20.0 billion forecast of economists polled by Bloomberg, while February’s figure was adjusted downward to an increase of $26.1 billion from the originally reported $27.6 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, rose $19.5 billion, a 7.2% increase year-over-year (y/y), while revolving debt, which includes credit cards, rose by $6.4 billion, a 7.9% y/y rise.

Treasuries were mixed after rallying initially following the data, as the yield on the 2-year note dipped 1 basis point to 0.14%, while the yield on the 10-year note increased 1 basis point to 1.58% and the 30-year bond rate was 3 bps higher at 2.27%.

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