Friendly Employment Data Sends Stocks To New Highs
Friday’s November employment data showed few signs of any mounting inflationary pressures, and that was enough to send stocks dramatically higher. The employment numbers showed non-farm payrolls grew by 234,000, unemployment remained steady at 4.1%, and the closely watched average hourly wage increased by a scant 0.1%.
Since the 0.1% increase in average hourly wages was lower than the 0.3% increase analysts expected, the market reacted with a strong, broad-based rally. According to preliminary figures, the Dow soared 247.12 to 11286.18, the Nasdaq gained 67.85 to 3520.63 and the S&P 500 rose 1.7% to 1433.05.
The wage figure in the employment report reassured the bond market that inflation remains under control, and that led many traders to conclude that the Fed might not need to raise rates for quite awhile. Taking their cue from the bond market, banks and brokerages surged higher on the positive outlook for interest rates.
Technology and Internet stocks also remained strong throughout the day, helping lead the Nasdaq and S&P 500 to all-time high closes. Among technology leaders, Cisco [CSCO>CSCO], Sun Microsystems [SUNW>SUNW], Apple Computer [AAPL>AAPL], and Oracle [ORCL>ORCL] all closed at all-time highs.
Stocks leading the Dow on Friday included such diverse companies as IBM [IBM>IBM] up 6 3/4 to 112, General Motors [GM>GM] up 3 5/8 to 75 3/4, Citigroup [C>C] , up 2 3/4 to 56 3/4, and Hewlett Packard [HWP>HWP] up 7 1/4 to 107.
Top-performing groups included computer technology [$XCI.X>$XCI.X], up 2.6%, banks [$BIX.X>$BIX.X], up 2.9%, broker-dealers [$XBD.X>$XBD.X], up 2.5%, and Internets [$IIX.X>$IIX.X], up 2.2%. Oil services [$OSX.X>$OSX.X], down 3.3%, was Friday’s weakest group.
Inktomi [INKT>INKT] was the top-performer on the Goldman Sachs Internet index [$GIN.X>$GIN.X]. Inktomi announced a 2-for-1 stock split this morning and gapped up on the open more than 10 points before finishing the day at 145. Also strong in the Internet group were Verisign [VRSN>VRSN], up 11 1/8 to 205 15/16, and eBay [EBAY>EBAY], up 11 11/16 to 178 3/4.