Dow on track for 4th gain after jobs report; Apple’s stock sinks on outlook

Stocks traded mostly higher Friday, following a stronger-than expected jobs report, with the S&P and Dow on track to notch their fourth straight day of gains. Hopes for an easing of trade tensions between China and the U.S. helped offset disappointment in quarterly results from Apple Inc. late Thursday.

Benchmarks

The Dow Jones Industrial Average DJIA, +0.44% rose 192 points, or 0.8%, to 25,515, the S&P 500 index SPX, +0.22% advanced 14.9 points, or 0.5%, to 2,757, while the Nasdaq Composite Index NQZ8, -0.75% rose 0.2% to 7451.

On Thursday, the Dow DJIA, +0.44% rose 264.98 points, or 1.1%, to 25,380.74, while the S&P 500 SPX, +0.22% gained 28.63 points, or 1.1%, to 2,740.37. The Nasdaq Composite Index COMP, -0.46% added 128.16 points, or 1.8%, to 7,434.06.

Stocks rallied this week but saw sharp losses in October, with the S&P 500 shedding 6.9% for its biggest monthly decline since September 2011. The Dow dropped 5.1% in its biggest monthly percentage fall since January 2016, and the Nasdaq was the worst-performing major benchmark, sliding 9.2% for its biggest fall since November 2008.

Market drivers

Traders were reacting to the Department’s Friday morning announcement that the U.S. economy added 250,000 new jobs in October, beating economists expectations of 202,000, according to a poll. The unemployment rate remained flat at 3.7%, while the report showed year-over-year wage gains rising to 3.1%, slightly above the consensus estimate of 3%.

Investors are also showing renewed optimism at the prospects of a detente in the U.S.-China trade spat, after a Bloomberg report Friday morning that President Trump wants to reach a trade deal with the world’s second largest economy at the G-20 summit later this month, and that he asked his cabinet to start drafting a deal.

On Thursday, President Donald Trump tweeted that he had a “long and very good conversation” with Chinese President Xi Jinping, and news outlets in China confirmed that discussions took place. The phone conversations come ahead of a late-November meeting that is anticipated to take place on the sidelines of a G-20 summit of world leaders, where the pair could iron out differences.

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Friday’s trade action also comes after Apple Inc. posted results that were better than expected but disappointed Wall Street on its outlook and said it would no longer disclose unit sales of its products for investors, as it has for more than a decade, sending shares of the iPhone maker lower Friday.

Stocks in focus

Shares of Apple AAPL, -5.96% were down 4.7% Friday morning.

Arista Networks, Inc. ANET, +4.60% stock popped more than 10% following a Thursday-evening earnings release that showed the company surpassing analyst revenue and profit expectations.

Synchrony Financial SYF, -8.06% shares are down 8.2% early Friday, following reports that Walmart Inc. WMT, +0.68% is suing the company for breach of contract.

Shares of Starbucks Corp. SBUX, +11.66% shares are up 9.4% after the firm posted same-store sales growth of 4%, above analyst expectations.

Kraft Heinz Co. KHC, -7.86% stock is down 9.6% in early trade Friday after missing Wall Street profit estimates in the third quarter.

Symantec Corp. SYMC, +6.06% shares are up 6.9%, after reporting smaller third-quarter losses than expected.

Shares of Newell Brands Inc. NWL, +13.84% are up 10.9% in early trade, after the consumer-goods company raised its full-year guidance for 2018.

VeriSign, Inc. VRSN, +21.89% stock rallied more than 20% Friday morning, after the company was upgraded at J.P. Morgan to neutral from underweight.

Exxon Mobil Corp. XOM, +1.76% stock is up 1.9%, after the company reported an earnings beat Friday morning

What the experts say

This is a great jobs report,” Randy Frederick, vice president of trading and derivatives at Charles Shwab. “Job growth was strong, and wage growth that shows we’re making progress, but that runaway inflation isn’t a concern,” he said.

Frederick explained a slight pullback in futures following the report as related to the Federal Reserve, as the strong jobs report makes it even more likely that the central bank will raise interest rates again in December.

Wall Street climbed for a third session, buoyed by hopes that the U.S. and China may restart trade talks,” wrote Andreas Georgiou, investment analyst at multiasset brokerage firm XM, in a Friday research note.

Economic data

The U.S. trade deficit rose 1.3% in September to a seven-month high as imports hit a record. A report on factory orders for September is scheduled to be released at 10 a.m.

Other markets

Asian stock markets were up Friday, possibly reflecting renewed investor optimism that a U.S.-China trade pact can be reached. European stocks were also trading up on the day.

 

/marketwatch.com

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