Stocks Shrug Off Disappointing Data To Reach New Record Highs - U.S. Commentary

(RTTNews) - With traders shrugging off a disappointing batch of U.S. economic data, stocks extended a recent upward move during trading on Friday. The major averages closed higher for the fourth straight session, once again reaching new record closing highs.

The major averages saw further upside going into the close, ending the day just off their highs of the session. The Dow advanced 220.74 points or 0.9 percent to 25,295.87, the Nasdaq climbed 58.64 points or 0.8 percent to 7,136.56 and the S&P 500 rose 19.16 points or 0.7 percent to 2,743.15.

For the holiday-shortened week, the Dow surged up by 2.3 percent, the Nasdaq soared by 3.4 percent and the S&P 500 jumped by 2.6 percent.

The continued strength on Wall Street came even though a report from the Labor Department showed weaker than expected job growth in the month of December.

The report said non-farm payroll employment climbed by 148,000 jobs in December after spiking by an upwardly revised 252,000 jobs in November.

Economists had expected employment to increase by 190,000 jobs compared to the addition of 228,000 jobs originally reported for the previous month.

Traders largely shrugged off the report, as analysts suggested that recent data points to overall strength in the labor market.

"While the headline job gain number may have disappointed, the average over the last three months was still very strong," said Joel Naroff, president and chief economist at Naroff Economic Advisors.

A separate report from the Institute for Supply Management showed an unexpected slowdown in the pace of growth in activity in the service sector.

The ISM said that its non-manufacturing index dropped to 55.9 in December from 57.4 in November. While a reading above 50 still indicates growth in the service sector, economists had expected the index to inch back up to 57.6.

Nonetheless, Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee, said the majority of respondents' comments indicate they finished the year on a positive note.

In other economic news, the Commerce Department reported the widest trade deficit in nearly six years in November, while factory orders jumped more than expected during the month.

Sector News

Despite the advance by the broader markets, most of the major sectors ended the day showing only modest moves.

Railroad stocks saw considerable strength, however, with the Dow Jones Railroads Index climbing by 1.5 percent. With the gain, the index reached a record closing high.

Kansas City Southern (KSU) and Norfolk Southern (NSC) turned in two of the railroad sector's best performances on the day.

Notable strength was also visible among retail stocks, as reflected by the 1.3 percent gain posted by the Dow Jones Retail Index. The index also ended the day at a record closing high.

Chemical, internet, and software stocks also moved to the upside, while natural gas stocks gave back ground following recent strength.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw further upside during trading on Friday. Japan's Nikkei 225 Index advanced by 0.9 percent, while Hong Kong's Hang Seng Index rose by 0.3 percent.

The major European markets also moved higher on the day. While the U.K.'s FTSE 100 Index climbed by 0.4 percent, the French CAC 40 Index and the German DAX Index jumped by 1.1 percent and 1.2 percent, respectively.

In the bond market, treasuries have moved lower over the course of the session after seeing some early volatility. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.3 basis points to 2.476 percent.

Looking Ahead

The economic calendar for next week starts of relatively quiet, although reports on retail sales and producer and consumer prices are likely to attract attention in the latter part of the week.

Financial giants JPMorgan Chase (JPM) and Wells Fargo (WFC) are also due to report their quarterly results next Friday as earnings season gets underway.