Stock Market Today for April 4, 2011 - Zacks Investment Research

CHICAGO, April 4, 2011 /PRNewswire/ -- Stock Market Today report for April 4, 2011 brought to you by Zacks Investment Research.  The unemployment rate declined to 8.8%, the lowest level in two years, according to a report by the Labor Department, painting a rosy picture of the economic recovery. Stock markets were also guided higher as Fed officials stated they would stick to their plans of providing economic stimulus. The DJIA hit its highest point for 2011 during the day before retreating after oil prices hit a 30-month high. For the indices, the next frontier is the upcoming earnings seasons which will also significantly influence investor sentiment.

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The Dow Jones Industrial Average (DJIA) touched 12,419.71, its highest intraday level since June 6, 2008 but finally closed at 12,376.72, gaining 0.5%. The Standard & Poor 500 gained 0.5% and closed at 1,332.41. The Nasdaq Composite Index rose 0.3% to finish off at 2,789.60. For the week, The Dow, S&P 500 and Nasdaq gained 1.3%, 1.4% and 1.7%, respectively. The CBOE Volatility Index dropped 1.9% to settle at 17.41. On the New York Stock Exchange, composite volumes were 4 billion shares and a couple of stocks advanced for every stock that declined.

Expectations were built up around the Labor department's report after Automatic Data Processing (ADP) released optimistic private sector job data on Wednesday. On many occasions the ADP report has diverged from the government report, but this time the Labor Department returned an optimistic picture and reported better-than-expected job data. According to the Labor Department, the US economy added 216,000 jobs in March and recorded the fastest pace of increase since May 2010. The data surpassed the economists' expectations of 185,000. Private-sector payrolls rose 230,000 ahead of expectations of 203,000 and added 240,000 in February. This is also the first time in five years that private sector job gains exceeded 200,000 for two consecutive months. The unemployment rate hit the lowest level in two years at 8.8% and suggests an improving economy.

Job data suggestive of an economic recovery does not alter the central bank's plans to purchase bonds worth $600 billion. "We provided additional monetary policy stimulus via the asset purchase program to help ensure that the recovery regained momentum" said the president of the Federal Reserve Bank of New York, William C. Dudley. "I don't see any reason to pull back from that yet," he added. Continuation of the monetary policy provides further strength to the economy and obviously strengthens the bullish outlook.

Among other data, the Commerce Department reported a plunge in construction spending as it declined 1.4% for the month and 6.8% on a yearly basis to a seasonally adjusted annual rate of $760.6 billion. This was the worst fall in 11 years and reflected the gloomy state of the housing market. Separately, the Institute for Supply Management reported that the manufacturing index has declined to 61.2% from 61.4% last month. The ISM index, however, is on the positive side and the manufacturing sector has expanded for 20 straight months. Nonetheless, with the rising cost of raw materials, inflationary pressures continue to weigh on market sentiment with the ISM price index gaining 3% to reach its highest level since July 2008, at 85.0%.

Crude oil prices sky-rocketed to hit a 30-month high and settled at $107.94 per barrel on the New York Mercantile Exchange. Surging crude prices took their cue from violence in Libya as loyalists of embattled Libyan leader Muammar Gaddafi forced rebels out of key areas in eastern Libya, making chances of an immediate resumption of crude exports rather unlikely. Energy indexes gained considerably as the NYSE Arca Oil Index, NYSE Arca Natural Gas Index and the Philadelphia Oil Service Index surged 0.9%, 0.5% and 0.2%, respectively. Among the gainers in the sector, Weatherford International Ltd. (NYSE:WFT), Schlumberger Limited (NYSE:SLB) and Cabot Oil & Gas Corporation (NYSE:COG) increased 2.0%, 0.5% and 2.0%, respectively.

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The financial sector also gained following the positive jobs data with the Financial Select Sector SPDR gaining 0.9%. Shares of Citigroup, Inc. (NYSE:C), JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corporation (NYSE:BAC) gained 0.7%, 0.5% and 0.3%, respectively. The Goldman Sachs Group, Inc. (NYSE:GS), Wells Fargo & Company (NYSE:WFC), American Express Company (NYSE:AXP) and Barclays PLC (NYSE:BCS) also gained after the report.

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