Closing Wrap-Up, Feb. 5
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February 5, 2010
Late session comeback leaves the Dow above the key 10,000 level following disappointing jobs data. The Dow (DJI) gained 10.05 points, closing the session at 10,012.23. The S&P 500 (SPX) added 3.08 points to 1,066.19. The Nasdaq (COMP) tacked on 15.69 points to 2,141.12. Volume was heavier Friday with the NYSE trading 1.56 billion shares and the Naz turning over 2.85 billion shares. Market breadth was mixed with the Big Board seeing losers outpace winners by a 18-to-13 margin. However, Nasdaq breadth was positive by a 15-to-12 margin.
Nonfarm payrolls were the big story Friday, but the data wasn’t what traders were looking for. Payrolls fell by 20,000 during January, below expectations for a mild gain. Even worse, the prior five months through December were revised lower by a total of 245,000 jobs. The unemployment rate did fall to 9.7 percent, a decline of 3-tenths, but this data is not what it seems. This is because the number of discouraged job seekers rose to 1.1 million in January, up from 734,000 in the year ago period. Much of this negative data seemed to be priced into the market, although the Dow was down triple digits midday.
A rise in the dollar took a toll on commodity prices with gold and oil falling. Crude prices fell $1.95 a barrel, or 2.67 percent, to settle at $71.19. Intraday, the commodity moved below $70 at $69.50. Concerns remain about the debt situation in Europe, which sent the dollar to a May high against the euro.
Toyota (TM) regained some of its recent losses, rising 4.1 percent to $74.72. The company’s president apologized publicly Friday about the recalls the company has had to make. TM raised its guidance for the year yesterday, which did ease some of the concerns about the recall. Nonetheless, the stock was trading above $90 in mid-January.
Chip stocks were a bright spot Friday, as well as for the week. The Semiconductor HOLDRs (SMH) rose 2.45 percent to $25.11 and gained 1.41 percent for the week. Shares of Applied Materials (AMAT) rose 3.64 percent Friday with Intel (INTC) up 2.37 percent.
The late session comeback for stocks was welcomed by the bulls. Though the major market indices did close negative on the week, the Dow closed above support at 10K. Earnings news will be much lighter this next week and the bulls are hoping that a correction will not take place. The Dow was down about 8.3 percent from its recent highs midday with a correction defined by a 10 percent decline.
Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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