A surprise drop in December nonfarm payrolls had stocks ambling back and forth for much of Friday, but a revised November report that showed first job gains in more than two years helped markets regain some ground towards the end. Ahead of the fourth-quarter earning season that kicks off this week, stocks ended with a 2.7% weekly gain, helped by November’s payroll numbers.
This morning’s premarket futures are pointing to a higher opening on Wall Street following news that China exports increased almost 18% in December, for the first increase in fourteen months. Stocks in Asia were quick to take the lead, jumping to their 17-month highs on the news. Natural resource shares shot higher as commodities rose on expectations of higher demand.
On Friday, the Dow Jones industrial average added 11 points, or 0.1%. The S&P 500 index gained 3 points, or 0.3%. The Nasdaq composite gained 17 points, or 0.7%. Three stocks rose for every two that fell on the New York Stock Exchange as volume fell slightly below the 1 billion mark.
Friday’s jobs report had the dollar heading south, as expectations grew a weak employment picture would hurt a strong US economic recovery, thus reducing chances of a rate hike in the near future. Nevertheless, weakness in the greenback helped commodities and shares of companies that derive a major share of their revenue from overseas operations. Last week’s S&P500 sector gains were led by shares of basic material (+7.3%), oil and gas (+5.5%), and industrial (+4.5%) groups, all beneficiaries of a weak dollar and emerging market economic strength.
Meanwhile, Citigroup slashed its fourth-quarter earnings forecasts on Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and JPMorgan Chase (NYSE:JPM), saying fixed-income trading revenues, which declined in the fourth quarter, are set to take a further 15% to 20% cut in 2010.
The fourth-quarter earnings season begins today, with Alcoa (NYSE:AA) reporting its numbers after the market closes. Key companies reporting their numbers this week include Intel (NASDAQ:INTC) after the market closes on Thursday and JP Morgan (NYSE:JPM) before the market opens on Friday.
