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CBS MarketWatch
U.S. stocks shrug off jobs data and resume gains
Friday January 10, 10:42 am ET
By Steve Gelsi
NEW YORK (CBS.MW) - U.S. stocks shrugged off weaker-than-expected jobs data Friday as investors hunted underpriced stocks and resumed their move into equities.
James McGlynn, managing director at Summit Everest Fund, said he's not particularly alarmed by the unemployment numbers because jobs data is typically a lagging indicator. Instead, he focused on the latest ISM numbers, which point to modest growth.
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The U.S. Labor Department said non-farm payrolls fell 101,000 in December instead of a gain of 32,000 expected by Wall Street. November jobs were also revised downward. The unemployment rate remained stable at 6 percent.
The decline in payrolls was the largest one-month drop since February of last year, when 165,000 jobs were eliminated, the Labor Department said Friday.
The Dow Jones Industrial Average rose 11 points to 8,787. The Nasdaq added 9 points to 1,448. The S&P 500 (CBOE:^SPX - News) rose 1 point to 928.
Lucent (NYSE:LU - News) continued to lead volume on the NYSE as shares rose 8 percent to $1.79.
Dow components Hewlett-Packard (NYSE:HPQ - News) rose 2 percent to $20.90 and Home Depot (NYSE:HD - News) gained 2 percent to $21.88. Alcoa (NYSE:AA - News) , which reported lower than expected quarterly results, fell 14 cents to $22.36.
Among the big Nasdaq stocks, Microsoft (NasdaqNM:MSFT - News) fell 14 cents to $55.67. Cisco (NasdaqNM:CSCO - News) jumped 2 percent to $15.23 and Intel (NasdaqNM:INTC - News) rose 1.1 percent to $17.25.
Ian Shepherdson, chief U.S. economist for High Frequency Economics, said the job numbers "look bad" and investors are "not happy" but the data doesn't reflect the pace of growth.
"You can't have it all - when productivity growth is faster than GDP growth, as was the case through the third quarter, and presumably in the fourth quarter, too, then payrolls and/or hours worked have to fall," he said in a note to clients.
The geopolitical scene flared up on Friday, with North Korea pulling out of the Nuclear Non-Proliferation Treaty. Oil and gold prices continued to rise in London trades in the face of uncertainty.
The Dow Jones Industrial Average (CBOT:^DJI - News) began the day up 5.21 percent this year. The S&P 500 (CBOE:^SPX - News) has grown 5.43 percent. The big winner has been the Nasdaq (NasdaqSC:^IXIC - News) has made up even more ground with a 2003 gain of 7.71 percent.
Bill Meade, managing director of RBC Capital Markets, said the tech sector had seen solid gains on the heels of higher earnings forecasts from the likes of SAP (NYSE:SAP - News) , Foundry (NasdaqNM:FDRY - News) , and EMC (NYSE:EMC - News) .
"Surprisingly so, you've had a disproportionate number of positive pre-announcements . . . which means these are undervalued assets and people are buying them for that reason," Meade said. "The bias is to the upside. Stocks are relatively cheap."
TrimTabs.com said $1.2 billion flowed into equities in the week ending Jan. 8, compared with an outflow of $2.2 billion in the prior week.
Director of Research Carl Wittnebert said equity funds that invest primarily in US stocks had outflows of $800 million, compared with outflows of $1.6 billion the prior week.
International equity funds had outflows of $2 billion, compared with outflows of $600 million the prior week.
Bond funds had inflows of $2.1 billion, compared with inflows of $1.9 billion the prior week.
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