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Stocks End Higher on Jobs Report, Trump Trade-Deal Comments

Here Are 3 Hot Things to Know About Stocks Right Now

  • The Dow Jones Industrial Average finished up nearly 400 points Friday after the U.S. jobs report for September showed the lowest level of headline unemployment in at least 50 years but still missed estimates and after President Trump said there is a good chance of a China trade agreement.
  • HP Inc. ( HPQ ) shares tumbled after the personal computer maker said it will lay off 7,000 to 9,000 employees, as part of a restructuring plan. HP Inc. is Real Money’s Stock of the Day.
  • Costco Wholesale (COST)   rose slightly after the discount hypermarket posted softer-than-expected fourth quarter sales that offset solid earnings and membership growth.

Wall Street Overview

Stocks closed near session highs Friday after the U.S. jobs report for September showed the lowest level of headline unemployment in at least 50 years and as President Donald Trump said there was a “good chance” of a pact between the U.S. and China in the trade war between the world’s two largest economies.
The Dow Jones Industrial Average rose 372 points, or 1.42%, to 26,573, the S&P 500 rose 1.42%, and the Nasdaq advanced 1.40%.
Apple ( AAPL ) , Merck ( MRK ) , and Travelers ( TRV ) led the Dow at the closing bell.

 

Financial stocks also traded higher with JPMorgan Chase ( JPM ) , Citigroup ( C ) , and Bank of America ( BAC)  posting gains.
The Dow and S&P 500 recorded their third straight weekly decline. The Nasdaq rose about 0.5% for the  week.

Nonfarm payrolls rose by 136,000 in September, the Labor Department’s Bureau of Labor Statistics said, below economists’ consensus forecasts of 145,000 new positions for the month, but still solid enough to cushion the impact of weaker ISM manufacturing and services sector activity readings earlier in the week. The unemployment rate fell to 3.5%, its lowest since 1969.

The disappointing economic reports have been increasing hope for a near-term interest cut from the Federal Reserve, which meets at the end of October in Washington. The CME Group’s FedWatch tool on Friday was pricing in a 76.4% chance of an October rate cut, lower than the 87.1% recorded before the report was released.

Fed Chairman Jerome Powell, speaking at a “Fed Listens” event in Washington, said that “while not everyone fully shares economic opportunities and the economy faces some risks, overall it is-as I like to say-in a good place.”

“Our job is to keep it there as long as possible,” he said.

Powell also said that the Fed is “examining strategies” that will help it achieve its inflation goal of 2%.

“This is as good as it’s likely to get until the trade war is resolved,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said of the jobs report. “Overall, these data offer something for everyone; bulls can point to unemployment, bears will highlight (average hourly earnings) and the unpersuaded can point to the OK payroll number. But this is an evolving situation, and the next clear move in the data will be [a] downshift in job growth.”

Mike Loewengart, vice president of investment strategy at E*Trade, questioned the possibility of a rate cut.

“While the bears may take this as further confirmation of a slower economy, it is actually a pretty strong read – especially when you factor in previous revisions,” he said. “What is really concerning, though, is the goose egg average hourly earnings number – a phenomena we haven’t seen in years.”

“Translation: Folks aren’t getting paid more, and a consumer with cash to spend is the lifeblood of a growing economy,” he said.

TheStreet.com founder Jim Cramer said the lack of wage growth was “incredible” and blamed the changing nature of work.

“I do think there is this gig economy that shafts people,” Cramer said on CNBC. “You don’t do as well.”

President Donald Trump announced the jobs numbers on Twitter, choosing to accentuate the positive, and maintained his innocence of charges that he pressured the president of the Ukraine to investigate Democratic presidential candidate Joe Biden and his son. Trump stirred the troubled waters again on Thursday by calling upon China to investigate Biden as well.

“Breaking News,” Trump wrote. ‘Unemployment Rate, at 3.5%, drops to 50 YEAR LOW. WOW America, let’s impeach your President (even though he’s done nothing wrong!).”

Later on Friday, Trump told reporters that there was a “good chance” of a trade agreement between the U.S. and China, saying U.S. tariffs were “killing China.”
HP Inc. ( HPQ ) shares tumbled 9.6% to $16.64 after  the personal computer maker said it will lay off 7,000 to 9,000 employees, or as much as 16% of the company’s last reported headcount of 55,000, as part of a restructuring plan aimed at cutting costs by $1 billion a year by 2022. HP Inc. is Real Money’s Stock of the Day.

Costco Wholesale ( COST)   rose slightly to $291.67 after the discount hypermarket posted softer-than-expected fourth-quarter sales that offset solid earnings and membership growth.

Shares of General Electric ( GE) dropped 1.7% to $8.56 after JPMorgan analyst Stephen Tusa said the company’s aviation unit offers “less growth with greater risk” as the group continues to struggle with its ongoing turnaround strategy.