Stocks Soar on Friday, NASDAQ Closes in the Black
Stocks started the Friday trading session in the black as the US employment report gave investors’ confidence despite a stronger than expected number. The Fed’s bond purchase program has helped buoy stocks over the past 18 months, but many believe that robust number will lead to a tapering of the program and eventual a correction in stock prices. Today’s price action gives pause to that concept which could mean that the good economic news is actually good news for the stock market.
Prior to the opening bell, the Department of Labor released the non-farm payrolls report along with the household unemployment rate. According to the BLS non-farm payrolls increased by 203K in November compared to the 180K expected by economists. October’s series was revised slightly higher by 4K to 204k for the month and September was also revised higher by 4K.
The unemployment rate dropped to 7% which was an even bigger surprise. Economist had expected the rate to drop to 7.2%. According to the BLS the decline occurred because of an increase in 818K jobs during the month of November according to the results of the household survey. Additionally, the hourly earnings, which reflects wage growth, ticked up by 0.2%. Yields immediately increased with the 10-year yield climbing above 2.9% for the first time since September of 2013.
The Nasdaq was the best performing of the major indices, closing higher on Friday and for the week. Momentum is solid with the MACD (moving average convergence divergence) index printing in positive territory with an upward sloping trajectory. One caveat is the RSI (relative strength index) which his printing at 71, above the overbought trigger level of 70.
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