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Markets closed higher on Friday after the U.S. economy added a substantially high number of jobs, which indicated that the U.S. labor market remains robust. Meanwhile, the Congress approved a two-week government funding Bill which would keep the government running through Dec 22. Moreover, investors also cheered news of progress on Brexit negotiations. While, the Dow and the S&P 500 posted weekly gains, the Nasdaq declined for the second straight week.
The Dow Jones Industrial Average (DJIA) increased 0.5%, to close at 24,329.16. The S&P 500 Index (INX) rose 0.6% to close at 2,651.50. The tech-laden Nasdaq Composite Index (IXIC) closed at 6,840.08, gaining 0.4%. Advancers outnumbered decliners on the NYSE by 1,833 to 1,004. On Nasdaq, advancing issues outnumbered the declining ones by 1,793 to 1,048. The CBOE VIX decreased 3.5% to close at 9.80.
Job Additions Surge
The U.S. economy added an impressive 228,000 new jobs, indicating that the labor market is at its strongest since the start of the 21st century. This reading on non-farm jobs surpassed the consensus estimate of an increase of 199,000. This also marks the second straight month that more than 200,000 jobs were created within the United States, which is indicative of a rebound from the lull that the economy hit after being pummeled back to back by two powerful hurricanes in September.
Majority of job additions came from manufacturing companies followed by construction firms. While construction companies added 23,000 new jobs, manufacturers added 31,000 jobs.
The unemployment rate in the United States remained unchanged at 4.1% in November. This figure was in line with the consensus estimate for the period and continues to linger at a 17-year low. Also, average hourly earnings increased 0.2% or 5 cents to $26.55 per hour.
Two-Week Funding Approved, Government Shutdown Fears Ebb
The Congress approved a two-week Bill on Thursday which extends the government funding through Dec 22. This prevents a possible Federal government shutdown the likes of which President Trump had threatened in August this year.
The Bill would now be presented to President Trump to be signed, effectively allowing Trump and his team of lawmakers to plan a possible extension of the Bill.
Investors Cheer as Brexit Negotiations Progress
Investor sentiments were boosted on Friday following encouraging progress on Brexit negotiations. Jean-Claude Juncker, President of the European Commission announced on Friday that ‘sufficient progress’ was made on Brexit. Moreover, the Brussels team negotiating the deal, has recommended the EU leaders to progress to the second phase of the deal in their meeting the next week.
Moreover, experts have stated that after this deal the United Kingdom would stay closely linked with single markets ‘in perpetuity’ and also the customs union. This boosted broad based gains for both European and U.S. stocks.
How Did the Benchmarks Perform?
The Dow amassed 117.68 points to finish in the positive territory. The S&P 500 added 14.5 points, also to end in the green. Of the 11 major segments of the S&P 500, 10 ended in the positive territory, with healthcare leading the advancers. The Health Care Select Sector SPDR ETF (XLV) gained 1.1% on Friday. Gains for both the Dow and S&P 500 were largely broad-based.
Meanwhile, the Nasdaq gathered 27.24 points to finish in the green. Such a rally was buoyed by a surge in shares of Amazon AMZN , Netflix NFLX and Alphabet GOOGL , shares of which gained 0.2%, 1.8% and 0.5%, respectively.
For the week, the Dow and the S&P 500 gained 0.4% and 0.4%, respectively. The Nasdaq declined 0.1% last week, to post the second straight weekly decline. U.S. Senate Republicans finally approved the tax cut Bill over the last weekend which boosted bank stocks that eventually helped the Dow to touch new highs. Meanwhile, investors speculated over the possible effects of retaining the alternate minimum tax in the final tax Bill.
The ISM Service Index for November declined from the 12 year high it had hit a month earlier. The S&P 500 posted four straight sessions of declines – its longest stretch of losses since March. Finally, investors maintained a close watch on any developments related to the Republican Tax Bill.
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