Market Wrap: Jobs Report Boosts Stocks, Dollar

Patrick T. Fallon/Bloomberg/Getty Images

By BERNARD CONDON

Investors think the U.S. economy is at a perfect temperat! ure for stocks: not too hot, not too cold. The latest evidence came Friday in a jobs report that showed a pickup in hiring last month that could mean more people with paychecks, more spending and higher corporate profits. But the report also showed that wages were stagnant, which cheered investors worried anything pushing up inflation could prompt the Federal Reserve to raise interest rates soon and kill the rally.

All major stock indexes rose sharply. The Dow Jones industrial average (^DJI) closed 208 points higher. All 10 sectors in the Standard and Poor's 500 index (^GPSC) rose. "The solid payroll report is great for economic growth and stock prices," said Anastasia Amoroso, global market strategist at J.P. Morgan Funds.

The good news pushed up the value of the dollar against other major currencies to the highest level in more than four years. U.S. bonds and gold fell as investors fled traditional "safe haven" assets.

284,000 Jobs Are Far Above ! Expectations

U.S. employers added 248,000 jobs ! in September, beating market expectations of a 215,000, the Labor Department reported. The hiring helped drive down the unemployment rate to 5.9 percent, the lowest since July 2008. Hiring in July and August was also stronger than initially estimated.

Still, average hourly wages fell a penny last month, the Labor Department reported. Wages are now up just 2 percent in the past year. "Wage inflation essentially came in zero, and that tells you that the Fed won't be in any rush to raise interest rates," said James Abate, managing director of Centre Asset Management.

The Dow rose 208.64, or 1.2 percent, to 17,009.69. It was the third 200-point move in a little over a week as markets turn more volatile. The S&P 500 index climbed 21.73 points, or 1.1 percent, to 1,967.90. The Nasdaq composite (^IXIC) rose 45.43 points, or 1 percent, to 4,447.62. Even with the gains on Friday, all three indexes ended more than half a percent lower for the week, adding to losses last w! eek.

The Situation Abroad

Earlier in the week, investors were rattled by a sharp drop in small-company stocks, pro-democracy protests in Hong Kong, and falling oil prices that hurt energy companies, big components in stock indexes.

Many economists predict the Fed will wait until mid-2015 to start raising rates, then proceed with further hikes slowly. The central bank's low-rate polices have helped keep borrowing rates low for consumers and businesses.

The good news in the U.S. contrasts with troubling signs in Europe. The Chinese economy is slowing, and 18-country eurozone is teetering on another recession. On Thursday, the European Central Bank disappointed investors by not announcing details of more stimulus measures. All major European indexes ended the week sharply lower.

The prospect of a two-speed global economy drove up the value of the U.S. dollar on Friday. The U.S. Dollar Index, which measures the dollar against six other major currencies, surged 1.3 percent. The euro fell 1.2 percent to $1.2515 while the dollar gained 1.2 percent to 109.76 yen.

Unofficial Start to Earnings Season

Investors will get a better sense of how ! much the improving economy is helping company profits next week when aluminum maker Alcoa (AA) kicks off the unofficial start to corporate earnings season. Financial analysts expect earnings per share for the S&P 500 to rise 6.8 percent from a year earlier, then surge 12 percent the next quarter and for all of next year, according to S&P Capital IQ, a research firm.

The S&P 500 seems reasonably valued, if you believe the earnings forecasts. The index is trading at 15.6 times its expected earnings per share over the next 12 months, according to S&P Capital IQ. That is only a point higher, that is, more expensive, than the long-term average. In stocks making big moves:

• Shares of Mylan (MYL) jumped 8 percent after the generic drug maker raised its outlook for the third quarter and year. The stock rose $3.73 to $50.23.
• Salix Pharmaceuticals (SLXP) rose 1.2 percent. The company gained on news it is scrapping its merger with the subsidiary of an Italian drugmaker after the U.S. created new limits on the tax benefits of incorporating overseas. The stock rose $1.78 to $152.87.

Benchmark U.S. crude fell $1.27 to close at $89.74 a barrel on the New York Mercantile Exchange, its lowest level since April of 2013. Brent crude, a benchmark for international oils used by many U.S. refineries, fell $1.11 to close at $92.31 on the ICE Futures exchange in London.

In other energy futures trading on the NYMEX, wholesale gasoline fell 3 cents to close at $2.379 a gallon, heating oil fell 2.2 cents to close at $2.616 a gallon and natural gas rose 10.7 cents to close at $4.039 per 1,000 cubic feet.

Prices for gold and Treasurys fell as traders moved money out of assets that are considered safer. Gold fell $22.20, or 1.8 percent, to $1,192.90 an ounce. Silver fell 22 cents to $16.83 an ounce and copper was flat at $3 a pound. The yield on the 10-year Treasury note rose to 2.44 percent from 2.43 percent on Thursday.

What to Watch Monday:

• The Container Store (TCS) reports quarterly financial results after U.S. markets close.

• The Earth has 370,000 miles of coastline with some amazing spots to walk along the beach, listen to the waves crash and relax -- or even party. In the U.S., you can choose among hundreds of Atlantic coast towns: the quiet of Cape Cod; the wide expanses and soft white sand along the Jersey shore, the dunes in North Carolina, or the high energy of Miami Beach. On the West coast, there are the hipster cool California beaches of Newport and Venice Beach, and the serenity of Oregon's Cannon Beach, which holds a sand-castle contest every June. And if the thousands of beaches on the continent aren't enough, you can hop over and take surfing lesson on Waikiki Beach in Hawaii or go windsurfing in Maui.
  1. Hit the Beach
• Providenciales in the Turks and Caicos won this year's Travelers' Choice award from TripAdvisor.com for its diving and snorkeling along the miles of accessible coral reefs. Other popular Caribbean destinations include the U.S. Virgin Islands, Barbados and the Cayman Islands. These are all year-round destinations, although many experts say the spring is the best time.
  2. Island-hop
• Is there anything more romantic than a relaxing week, watching the sun set from your private hut in the French Polynesian island of Bora Bora? Been there? Done that? How about the honeymoon hotspots of Tahiti or Fiji or the 115 islands of the Seychelles in the Indian Ocean? Check out Australia's Dunk Island rainforest, or get to the Maldives while you still can. Some climate experts warn that it could be the first nation to disappear due to climate change.
  3. Get exotic
• There are far more than seven natural wonders in our world, but that list is not a bad place to start. You can see the Grand Canyon, the Great Barrier Reef off the coast of Australia and Mount Everest. There's also the dramatic natural scenery along the Swiss Alps as well as 59 U.S. national parks, including the classic (Yosemite, Yellowstone), the most-visited (Great Smoky Mountains), the wet (the Everglades) to the dry (Death Valley, where the temperature once hit 134 degrees).
  4. Count the natural wonders
• If you want everything taken care of for you, a cruise might be your ticket. It's a floating home with tons of food (of varying quality), entertainment and multiple destinations. It also may give you the most bang for the buck, with budget packages available as well as upscale voyages. You can cruise through the Caribbean, up to Alaska (in-season, of course), through the Mediterranean, through the fjords of Norway or down the rivers of Europe. A cruise can also offer something for you, your children and the grandkids, too. The biggest cruise companies are Carnival (CCL) (which also includes Princess and Holland American), Royal Caribbean (RCL), and Star Cruises (based in Malaysia).
  5. Cruise it
• After endless meetings, computer time and paperwork, this is the time to get moving. The Grand Canyon is not only grand to look at but it offers some high-adrenaline hiking and white water rafting. Yosemite, Yellowstone and other national parks also offer top-notch hiking trails. Overseas, you can take a four-day, 30-mile trek along the Inca trail to Machu Picchu in Peru; explore the rugged beauty and wildlife of Australia's Outback, or cycle through the rolling hills and villages of France's Provence and Bordeaux regions. While these are active vacations, you don't have to all of the work yourself. Tour companies will make the (sometimes-luxurious) arrangements, and you don't have to rough it.
  6. Don't rest
• This might be the ultimate getaway: book a seat on Richard Branson's Virgin Galactic flight into space. The first one is set to launch in the spring of 2015 from the company's Spaceport in New Mexico. Obviously, it's not for everyone. The cost for a seat is more than $400,000. If you want to keep your feet firmly planted on earth, revisit Darwin's trip to the Galapagos Islands or interact with the penguins in the Falkland Islands. Or learn the local culture by trekking through Thailand or Costa Rica.
  7. Be adventurous
• You can take a safari through more than 100 countries in every continent, but safaris are most associated with Africa. The best times are usually January through March and June through December. A trip into the wild is a chance to get in harmony with nature, experience local cultures and traditions and maybe capture it with one-of-a-kind photos.
  8. Get back to nature
• I'm not sure which is better: a Michelin-rated restaurant in Paris or a sidewalk cafe with fresh baguettes and pastries. (I do know which is more affordable.) Europe is full of foodie destinations, such as Rome or a tapas crawl in Barcelona. In Asia, you'll want to sample the wonderfully fresh sushi in Tokyo and food in Huangzhou or dozens of other Chinese cities.

  In the U.S., go coast-to-coast with lobster rolls in Maine, the famous restaurants and food trucks in New York, Chicago's burgers and pizza, Creole specialties in New Orleans and the coffee bars and fresh oysters in San Francisco. There are many local favorites. Travel+Leisure magazine names the pizza in Providence, Rhode Island (check out the movie "Mystic Pizza" for the Connecticut version); the cheesesteaks of Philadelphia; the small cafes in Savannah, Georgia; the Tex-Mex chili sauces in San Antonio; and the barbecue in Kansas City. When you've cons! umed everything there is to eat in the U.S., go north of the border to Montreal and Quebec for French cuisine.

  9. Be a foodie
• Just because you're old enough to retire doesn't mean you too old to learn. In fact, this may be the best stage of life to expand your mind. Road Scholar is a nonprofit that offers 5,500 educational tours in all 50 states and 150 countries. Popular programs include Christmas in New York City and photography of the four corners region of Colorado, Utah, New Mexico and Arizona. In volunteer vacation, participants maintain trails in the U.S. Virgin Islands, work with orphaned or abandoned children in Peru or do other meaningful things with your time, brain and energy.
  10. Learn and do well by doing good
• It's more than a Fleetwood Mac hit of the 1970s. The opportunities to travel are endless. You can go by yourself, as a couple, in small groups. You can go for a long weekend to Boston or settle in for a two-month stay at a villa in the hills of Italy. You can go on a limited budget (AARP offers travel discounts) or live in the lap of luxury. You'll meet new people. You can start to cross items off of your bucket list -- and add new ones to it.
  11, Don't stop thinking about tomorrow
• More from Drew Trachtenberg:

Source : http://www.dailyfinance.com/2014/10/03/market-wrap-jobs-report-boosts-markets-dollar/