Stocks Regain Ground But Remain Mostly Negative - U.S. Commentary

(RTTNews) - After falling sharply at the open, stocks have regained some ground over the course of the trading session on Friday. The markets have maintained a negative bias, however, with traders reacting to disappointing jobs data.

The major averages have climbed well off their worst levels of the day but currently remain in the red. The Dow is down 77.43 points or 0.5 percent at 16,194.58, the Nasdaq is down 14.12 points or 0.3 percent at 4,612.97 and the S&P 500 is down 9.58 points or 0.5 percent at 1,914.24.

The sell-off seen at the start of trading came following the release of a report from the Labor Department showing much weaker than expected job growth in the month of September.

The report said non-farm payroll employment rose by 142,000 jobs in September, well below economist estimates for an increase of about 203,000 jobs.

Job growth in July and August was also downwardly revised to 223,000 and 136,000, respectively, reflecting a net downward revision of 59,000 jobs.

The disappointing data added to recent concerns about the impact that overseas weakness is having on the U.S. economy.

Selling pressure waned not long after the open, however, as the weaker than expected job growth also shored up expectations that the Federal Reserve will hold off on raising interest rates later this month.

Rob Carnell, chief international economist at ING, said, "For once, these labor market numbers gave an unambiguous result. The problem is that it was unambiguously negative."

"No rate hike this month then it seems," he added. "But it raises doubts too about the probability of a December hike, unless the Fed changes the basis upon which it decided policy rates."

Among individual stocks, shares of Progress Software (PRGS) have fallen sharply on the day after the business software maker reported better than expected third quarter earnings but lowered its full-year revenue guidance.

Supermarket operator Supervalu (SVU) has also moved to the downside after CEO Sam Duncan informed the company's board of his decision to retire at the end of February.

On the other hand, shares of Micron Technology (MU) have moved notably higher after the chip maker reported better than expected fourth quarter adjusted earnings and net sales.

Sector News

While most of the major sectors have climbed off their worst levels of the day, substantial weakness remains visible among financial stocks.

Reflecting the weakness in the financial sector, the Dow Jones Banks Index and the NYSE Arca Broker/Dealer Index are down by 3.2 percent and 2.8 percent, respectively, after hitting multi-month intraday lows.

Airline stocks also continue to see considerable weakness in mid-day trading, resulting in a 1.7 percent drop by the NYSE Arca Airline Index. Virgin America (VA), American Airlines (AAL), and Delta (DAL) are posting notable losses.

On the other hand, gold stocks have shown a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 6.2 percent. The strength in the sector comes as gold for December delivery is jumping $24 to $1,137.70 an ounce.

Oil service, steel, and biotechnology stocks have also turned higher as the day has progressed, contributing to the recovery attempt by the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Hong Kong's Hang Seng Index surged up by 3.2 percent, while Australia's All Ordinaries Index slumped by 1.1 percent. Japan's Nikkei 225 Index closed nearly flat.

Meanwhile, the major European markets all ended the day on the upside. While the U.K.'s FTSE 100 Index advanced by 1 percent, the French CAC 40 Index and the German DAX Index climbed by 0.7 percent and 0.5 percent, respectively.

In the bond market, treasuries have spiked higher in reaction to the disappointing jobs report. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 9.5 basis points at 1.947 percent.