Stocks finished the week higher, keeping the post-election rally going, after a report released Friday showed more jobs were created in October than expected.
The Dow Jones industrial average gained 72.78 points, or 0.71%, to finish at 10,387.54. The broader Standard & Poor's 500 index was up 4.5 points, or 0.39%, to a new 52-week high of 1,166.17. The Nasdaq composite index rose 15.31 points, or 0.76%, to 2,038.94.
Next week's key event is the Federal Open Market Committe (FOMC) meeting on Wednesday. Economists expect the Federal Reserve to raise its key interest rate by 25 basis points, to 2%.
Indeed, the outlook on Fed policy was significantly altered by the strength in the October payroll data. The median estimates now indicate the FOMC won't be taking a break in December and will continue removing accommodation at both Wednesday's meeting and December's, pushing the funds target to 2.25% at year end, says Action Economics.
There are also plenty of economic reports to watch next week. Tuesday brings wholesale inventories and sales, followed by the trade report on Wednesday. Weekly jobless claims will be released Thursday, with a report on October retail sales, University of Michigan consumer sentiment, and business inventories coming on Friday.
On the earnings calendar, look for Cisco Systems (CSCO), Liberty Media (L), Progressive (PGR), Marsh & McLennan (MMC), and May Department Stores (MAY) to report results on Tuesday; Starbucks (SBUX) and Federated Department Stores (FD) on Wednesday; and Dell (DELL), Agilent (A), Target (TGT), Kohl's (KSS), and Tiffany (TIF) on Thursday.
Friday's rally was sparked by the employment report. U.S. nonfarm payrolls jumped 337,000 in October -- beating the median forecast for a 180,000 gain -- after a revised 139,000 increase in September (up 96,000 originally). The August payroll figure was also revised higher to 198,000. Construction jobs added 71,000, most likely thanks to the hurricanes that swept Florida and the Southeast.
The unemployment rate rose slightly to 5.5% from 5.4%. Average hourly earnings rose 0.3% after a revised 0.1% gain in September. Average hours were steady at 33.8.
In the energy markets, December NYMEX crude oil settled up 79 cents to $49.61 per barrel, following a very choppy session that saw prices range from five-week lows of $48.30 to highs of $49.70. Hedge fund interest was seen on both sides of the market on Friday, though buyers ultimately prevailed, as sources cited short covering into the weekend, says Action Economics.
Among stocks in the news Friday, pharmaceuticals were in the spotlight once again, after a medical journal says Merck's (MRK) Vioxx should have been withdrawn several years ago. The Wall Street Journal reports that Merck is facing pressure to search for a new CEO. Merck shares were lower.
Vaxgen (VXGN) shares rose after Health & Human Services awarded a contract valued at $877.5 million to the company to manufacture and deliver 75 million doses of its new anthrax vaccine.
Sears (S) shares jumped nearly 24% after Vornado Realty Trust reportedly acquired a 4.3% stake in the retailer in the third quarter.
In tech, shares of search engine Google (GOOG), which closed at a new high of $196.03 on Monday, fell after UBS Financial started coverage with a reduce recommendation.
Chip maker Nvidia (NVDA) reported third-quarter earnings per share of 15 cents, vs. 4 cents a year ago, on a 6.1% revenue rise and absence of year-ago charges. It sees fourth-quarter revenue flat to slightly higher from the third quarter. The shares rose.
Altria Group (MO) said Thursday it is preparing to split itself into two or three entities when the tobacco-litigation environment improves, according to news reports.
GameStop, which will be spun off from Barnes & Noble (BKS), will be added to the S&P SmallCap 600 index after the close of trading on Nov. 12, replacing Three-Five Systems, which is being removed due to its low market cap.
Treasury prices plunged on Friday, as the blowout gain on payrolls and upward revisions were quite a gift to long-term bond bears, says Action Economics. The strong headline gain contributed to long-liquidation, especially at the front-end of the curve on elevated expectations that the Fed will keep its tightening schedule on track or even consider larger moves if the economy continues to accelerate into 2005, says Action Economics. The benchmark 10-year note yield rose 12
basis points to 4.19%.
Meanwhile, the U.S. dollar fell to a record low against the euro as concern of swelling fiscal deficits outweighed the positive jobs report and the jump in the 10-year yield. The weakness in the greenback drove precious metals prices higher.
European stock markets finished higher on Friday. London's Financial Times-Stock Exchange 100 index was up 11.5 points, or 0.24%, to 4,739.8.
Germany's DAX index gained 22.2 points, or 0.55%, to 4,063.58. In Paris, the CAC 40 index rose 18.54 points, or 0.49%, to 3,780.99.
In Asia, the markets finished higher on Friday on the heels of Wall Street's gains. Japan's Nikkei 225 index rose 115.5 points, or 1.06%, to 11,061.77. In Hong Kong, the Hang Seng index gained 125.86 points, or 0.94%, to 13,494.95.