Sun, Feb 09, 2014 - Page 15 News List

US markets end higher following midweek rally

AFP, NEW YORK

US stocks recovered from an early-week swoon to close the week with net gains, picking up enough momentum midweek to override Friday’s disappointing US jobs report.

The Dow Jones Industrial Average finished the week up 95.23 (0.61 percent) to 15,794.08. The broad-based S&P 500 tacked on 14.43 (0.81 percent) to 1,797.02, while the tech-rich NASDAQ Composite Index advanced 21.98 (0.54 percent) to 4,125.86.

The gains ended two straight weeks of declines and followed a dreary January that shaved more than 5 percent from the Dow amid rising concerns about emerging economies and mediocre US earnings. Those worries picked up new force on Monday, when US stocks fell more than 2 percent on an Institute for Supply Management (ISM) report that showed surprisingly weak manufacturing activity. Friday’s monthly jobs report also lagged expectations. The US Department of Labor said the economy added 113,000 jobs last month, far below the 175,000 forecast.

However, Friday’s market benefited from a shift in sentiment that arrived earlier in the week, BMO Private Bank chief investment officer Jack Ablin said.

All three indices gained more than 1 percent.

“All of a sudden, moods lightened,” Ablin said. “Attitudes improved somewhere midweek.”

Ablin said that not all of the week’s data was weak. A jobs report from private payrolls firm ADP showed solid growth last month, while ISM data on the services sector bested expectations for last month.

Investors may have written off Friday’s jobs data to cold weather, he said.

“You’ve had thousands of people stranded on roadways, you’ve had thousands of flight cancelled,” Ablin said. “Speaking from the epicenter of the polar vortex, it’s damn cold, and you’re not going to go out and do things.”

“It’s probably not a surprise that Disney’s earnings hinged on a movie called Frozen,” he said.’”

In fact, better-than-expected earnings from Disney did coincide with the turnaround in stocks. The results were released after the market close on Wednesday and before strong rallies on Thursday and Friday.

The Disney earnings report helped offset some other disappointing earnings results. The most dramatic tumble came from Twitter, which plummeted more than 24 percent on Thursday following its first earnings report as a publicly traded company.

Some analysts slammed the microblogging company after data showed the number of worldwide users was up just 9 million from the figure of 232 million when Twitter went public in November.

Stifel analyst Jordan Rohan downgraded Twitter, saying that “user growth metrics faltered.”

“The company did a poor job explaining how and why the lower user growth was a temporary phenomenon,” Rohan added.

Next week’s agenda will be highlighted by congressional testimony from new US Federal Reserve Chair Janet Yellen.

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