Stocks Jumped on Fewer Job Losses than Expected. Dow Leaders: JPM, CSCO, CAT, AXP, and DIS

Published on Friday, 03 September 2010 18:36 Written by Christopher Lynn

New York, September 3^rd (TradersHuddle.com) – Stocks gained, with the Dow Jones Industrial Average turning positive for the year, after a government report showed the economy shed fewer jobs than feared, easing concern the economy is heading to a double dip recession.

The Dow Jones Industrial Average gained 127.83 points, or 1.24%. The S&P 500 jumped 14.41 points, or 1.32%, while the NASDAQ rallied 33.74 points, or 1.53%. Market breadth was positive. On the NYSE winners topped decliners by a rate of 10 to 3. On the NASDAQ, advancers outpaced losers by a rate of more than 17 to 5.

For the week, the blue chip index gained 2.93%; the S&P 500 index rallied 3.75% and the NASDAQ jumped 3.72%.

The market started well into positive territory after the Labor Department reported that non-farm payrolls fell by 54,000, which was much better than the 120,000 economists had predicted. The lower decline in overall payrolls was due to strength in healthcare and temporary staffing industries, as private employers added 67,000 jobs in August, better than the 44,000 that was projected.

The jobs figures together with better than expected data, especially in manufacturing earlier in the week helped eased the economic slowdown concern, reducing the probability of a double dip recession. However the early momentum suffered a slight set back after the ISM Service Index for August disappointed investors. It slipped to 51.5, which is below the 53.0 that had been widely expected.

Participation in the session was low, as trading volume remained below average, despite the release of the highly anticipated jobs report. Lightly staffed trading desks ahead of the Labor Day Holiday and skepticism from the retail investor were pointed as reasons why volume at the NYSE was not able to reach 1 billion shares traded.

Economic sensitive sectors, like financials, technology, consumer discretionary, and industrials were the best performing among the 10 key S&P 500 sectors. Financials posted the best gains, jumping 2.2% on news private employers added more jobs than expected. JPMorgan (NYSE:JPM), the second largest U.S. lender, led both the sector and the Dow Jones Industrial Average, as shares surged 2.63% to $39.17.

American Express (NYSE:AXP), the credit card issuer, was the fourth best Dow component, as shares climbed 2.25% to $41.80. American Express moved to the upside on strength from the financial and consumer discretionary sectors. The credit card issuer sees increased volatility with every jobs related report that is released.

Technology shares, which had been hit hard during the August slump, performed well in the session, as market participants looked for beaten stocks chasing performance. Cisco (NASDAQ:CSCO), the largest maker of networking equipment in the world, jumped 2.53% to $21.04, lifting the tech sector to a 1.7% gain, and helping the tech heavy NASDAQ to outperform in the session.

The jobs gain in the private sector and the less than feared overall job losses helped consumer discretionary stocks to post a 1.5% gain. Walt Disney (NYSE:DIS), the largest media company in the world, rounded up the Dow top five components, as shares added 2.24% to $34.67. Disney, and Time Warner Cable (NYSE:TWC) reached a new long-term agreement that will keep all Disney-owned cable networks, including sports Web site ESPN3.com and local ABC stations, available to Time Warner customers without an extra charge.

Industrial stocks gained 1.4% as a group, with Caterpillar (NYSE:CAT), the world’s largest earthmoving equipment maker, adding 2.25% to $70.08. Caterpillar posted the third biggest percentage gain in the blue chip index.

Crude oil fell, after the drop in the services sector of the economy outweighed the better than expected jobs report from the Labor Department. The contract for October delivery slipped 0.6% to $74.60 on concern the recovery will be slow.

Meanwhile Treasuries fell, as equities advanced. The yield on the benchmark 10-year note climbed to 2.71%.