Big gains at Wall Street on Friday following employment report

Nonfarm payrolls rise much more than expected in July

U.S. stocks ended modestly higher for the week that ended on Friday, 03 August 2012. The weekly gains were possible mainly fur to the big surge in equities on the last trading day of the week. Earning reports dominated the week as did comments from Federal Reserve and European Central Bank heads regarding their latest takes on the respective economies and whether any further stimuli can be expected. Roughly two thirds of companies that reported beat earnings estimates. On the other hand, roughly more than half have missed sales expectations. Guidance has been decidedly cautious.

For the week, Dow ended higher by 20.51 points (0.2%) at 13,096.17. Nasdaq ended higher by 9.81 points (0.3%) at 2,967.9. S&P 500 ended higher by 5.02 points (0.4%) at 1,390.99.

The Dow and the S&P 500 both gained for the fourth straight week, and the Nasdaq also edged higher for the five days. The Dow's weekly win streak was its longest of the year.

The week kicked off on a weak note with the S&P 500 finishing nearly flat on the day on Monday. Tuesday's action was similar to that observed on the day before as the major indices hovered around their respective unchanged levels for most of the session. Low volume and in-line economic data contributed to an uneventful session as investors awaited comments from the Federal Reserve and the European Central Bank later in the week.

On Wednesday before the open, The ADP National Employment Report indicated employment in the nonfarm private business sector rose 163K in July. This was above the 125K expected by the consensus. Later in the day, the Federal Open Market Committee repeated that it would 'monitor incoming information on economic and financial developments and will provide additional accommodation as needed.' The FOMC kept its pledge to keep rates low to at least late 2014.

Thursday's trade was focused on the comments from European Central Bank President Mario Draghi. During his press conference, Mr. Draghi failed to announce new measures to help stem the European debt crisis.

On Friday, 03 August 2012, equities saw a broad market rally, which started with optimism across European markets. A strong nonfarm payroll report combined with a positive ISM Services print supported the day's gains. After advancing 1% at open, equities added to their strength.

The Dow Jones Industrial Average rose 217 points, or 1.7%, to 13,096, while the Nasdaq Composite Index closed with a gain of 58 points, or 2%, to 2,968 and the S&P 500 Index rose almost 26 points, or nearly 2%, to 1,391.

The financial sector the strongest performer and telecommunications was the weakest of its 10 major industry groups.

A strong nonfarm payroll report combined with a positive ISM Services print supported the day's gains. Nonfarm payrolls came in at 163K versus the expected 100K in July while nonfarm private payrolls added 172K against expectations of a 105K increase. The unemployment rate of 8.3% ticked up from its previous reading of 8.2%.

The July ISM Services index was reported at 52.6, slightly above the 52.3 expected, and up from June's 52.1 reading.

The dollar index was considerably lower on Friday At 82.45, the index ended down 1.1%.

On the earning front, LinkedIn gained 16% after reporting in-line EPS and better than expected revenues and full-year guidance. Procter & Gamble gained 3.1% after beating earnings estimates but coming up short on revenues.

Crude oil got a major boost on Friday, 03 August 2012 at Nymex gaining nearly 5% after the better than expected employment data, positive performance in Europe while also benefitting from the dollar's decline. Crude-oil futures rallied nearly 5% Friday, spurred by optimism following a positive U.S. jobs report and as Wall Street traded sharply higher and the dollar lost some ground.

Light and sweet crude for September delivery rose $4.27, or 4.9%, to settle at $91.40 a barrel on the New York Mercantile Exchange on Friday. The settlement was the highest in two weeks.

Gold for December delivery advanced $18.60, or 1.2%, to settle at $1,609.30 an ounce on the Comex division of the New York Mercantile Exchange. The metal declined 0.5% on the week, however. Silver for September delivery rose 81 cents, or 3%, to settle at $27.80 an ounce. Silver rose 1.1% on the week.

For every stock sliding five gained on the New York Stock Exchange, where composite volume topped 3.7 billion. Nasdaq Composite volume surpassed 1.7 billion shares.

Indian ADRs ended mostly higher on Friday. HDFC Bank and ICICI Bank gained 4.8% and 2.1% respectively. Infosys and Wipro Technologies gained 2.2% and 2.9% respectively. Tata Motors gained 3.9%.

For the year, Dow, Nasdaq and S&P 500 are trading higher by 7.2%, 13.9% and 10.6% respectively.

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