U.S. Stocks Recover From Early Weakness To Close Sharply Higher

Stocks showed a substantial turnaround over the course of the trading session on Friday, rebounding from early weakness to end the day sharply higher. The major averages all moved to the upside, with the tech-heavy Nasdaq leading the charge.

The major averages pulled back off their best levels going into the close but remained firmly positive. The Nasdaq surged 211.51 points or 1.6 percent to 13,431.34, the S&P 500 jumped 50.31 points or 1.2 percent to 4,308.50 and the Dow advanced 288.01 points or 0.9 percent to 33,407.58.

For the week, the Nasdaq shot up by 1.6 percent and the S&P 500 climbed by 0.5 percent, but the Dow fell by 0.3 percent.

The early weakness on Wall Street came following the release of a Labor Department report showing employment in the U.S. surged by much more than expected in the month of September.

The Labor Department said non-farm payroll employment shot up by 336,000 jobs in September compared to economist estimates for an increase of about 170,000 jobs.

The closely watched Labor Department report also showed notable upward revisions to job growth in the two previous months.

Employment in August and July jumped by 236,000 jobs and 227,000 jobs, respectively, reflecting a net upward revision of 119,000 jobs.

The report triggered a spike by treasury yields amid renewed concerns about the outlook for interest rates, with yields once again soaring to their highest levels in over sixteen years.

Treasury yields pulled back well off their highs as the day progressed, however, contributing to the subsequent rebound seen on Wall Street.

“As the day moves forward we expect many in the markets to question the veracity of this report simply because the number came out 4x above the ADP report yesterday,” Alex McGrath, Chief Investment Officer for NorthEnd Private Wealth.

He added, “That aside this move in yields will continue to serve as a gale force headwind to equities through the end of the year should they remain elevated at these levels.”

Traders may also have looked to pick up stocks at reduced levels, feeling the recent rate concern-related selling has been overdone.

Sector News

Software stocks showed a substantial move to the upside over the course of the session, resulting in a 2.6 percent surge by the Dow Jones U.S. Software Index.

Significant strength also emerged among natural gas stocks, as reflected by the 2.3 percent jump by the NYSE Arca Natural Gas Index.

The strength among natural gas stocks came amid a sharp increase by the price of the commodity, with natural gas for November delivery spiking $0.172 to $3.338 per million BTUs.

Gold stocks also saw considerable strength amid an increase by the price of the precious metal, driving the NYSE Arca Gold Bugs Index up by 2.2 percent.

Semiconductor, networking and brokerage stocks also moved notably higher as the day progressed, while some weakness remained visible among telecom stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index fell by 0.3 percent, while Hong Kong’s Hang Seng Index surged by 1.6 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index jumped by 1.1 percent, the French CAC 40 Index advanced by 0.9 percent and the U.K.’s FTSE 100 Index climbed by 0.6 percent.

In the bond market, treasuries climbed well off their early lows but remained firmly in the red. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.7 basis points to 4.784 percent after reaching a high of 4.887 percent.

Looking Ahead

Reports on consumer and producer price inflation are likely to be in the spotlight next week, while earnings news from financial giants Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo (WFC) may attract attention later in the week.

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