Payrolls data strong enough to keep the bulls in charge Friday. The Dow (DJI) added 127.83 points to close the session at 10,447.93. The S&P 500 (SPX) gained 14.41 points to 1,104.51 with the Nasdaq (COMP) tacking on 33.74 points, or 1.53 percent, to 2,233.75. Volume remained light on the session with the NYSE trading 946.2 million shares and the Naz turning over 1.66 billion shares. Market breadth was positive by a 24-to-7 and 20-to-6 margin on the Big Board and Naz respectively.

Nonfarm payrolls did fall in August by 54,000, but this exceeded estimates for a decline of 90,000. More importantly, private payrolls rose by 67,000 when a gain of about 40,000 was anticipated. The unemployment rate did rise a tenth to 9.6 percent, but traders were relieved that the data wasn’t worse. Talk of a double dip recession accelerated at the end of August, but has since faded, resulting in strong gains for stocks to start September. 

Traders overlooked a worse than expected ISM Non-Mfg Index Friday, although the services sector does remain in expansion territory. The index came in at 51.5, but estimates were for a reading closer to 53.0 after a 54.3 reading in July. Recent economic data has shown that though a double dip recession is not likely, the recovery is moving slowly. 

Merger activity continues to be heavy with Goldcorp (GG) announcing plans to buy Canada’s Andean Resources for $3.4 billion. GG shares fell 2.3 percent on the news to a price of $42.84. Gold stocks in general lost ground Friday with the Gold SPDRs (GLD) down a third of a percent to $121.86.

Earnings news was mixed Friday with Take-Two (TTWO) and H&R Block (HRB) rallying, but shares of Campbell Soup (CPB) declining. TTWO shares gained 10 percent to $9.52 after reporting an unexpected quarterly profit and raising its fiscal year forecast. HRB shares rallied 5.8 percent to $13.30, benefiting from a smaller than expected loss. CPB shares lost 3.0 percent to $36.21 thanks to weakness in revenues. CPB has been stuck in a trading range the past three months and is near the lower end of this range currently. 

Volumes were rather light Friday with many traders possibly getting a head start on the holiday weekend. Monday will see all markets closed for the Labor Day holiday in the U.S. Data next week will be very light so it will be interesting to see how traders react and if the bulls can hold onto this week’s strong gains.  

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site