Dow At Highest Level since 2008; NASDAQ at 11-Year High

Published on Friday, 03 February 2012 19:20 Written by Christopher Lynn

New York, February 3^rd (TradersHuddle.com) – Stocks rallied broadly after strong employment data and a solid ISM Services sector reading boosted confidence in the strength of the recovery in the world’s biggest economy. The Dow jumped to its highest level since 2008, while the NASDAQ hit an 11-year high.

The Dow Jones Industrial Average jumped 156.82 points, or 1.23%. The S&P 500 index gained 19.36 points or 1.46%, while the NASDAQ rallied 45.98 points, or 1.61%.

For the week the Dow climbed 1.59%, while the NASDAQ rallied 3.16% and the S&P 500 jumped 2.17%.

The market started with sharp gains after futures surged after employment data blew past expectations. According to the Labor Department, the U.S. economy created 234,000 jobs in January, well above consensus for 155,000 jobs. The unemployment rate fell to 8.3% from 8.5% last month, as private employers added 257,000 jobs. A drop in labor force participation of 1.2 million was the only negative that undermined the solid report. Earlier positive PMI figures in Europe had provided some support.

In Europe, equity markets jumped following the encouraging economic data in the U.S. and the better than expected PMI figures around the euro zone and the U.K. Stocks posted their biggest weekly gain since December, surging past resistance levels. Optimism on the global economy outweighed concern over the lack of a deal on debt restructuring for Greece, with some participants pointing to the fragile of the gains amid this uncertainty.

All of the S&P 500 Select sectors and 28 of 30 Dow components posted gains in the broad move. Financials, consumer discretionary, and energy logged the biggest gains, while defense sectors, like utilities and consumer staples gained the least in the session.

The Financial SPDR ETF (NYSE: XLF) jumped 2.68% to $14.73, posting a weekly gain of around 4%. The sector benefited from an outsize move in the big banks that have a big exposure to economic growth and particularly the consumer through personal loans and mortgages.

Bank of America (NYSE: BAC) rallied 5.23% to $7.84, closing above its calculated resistance of $7.50. The stock posted the biggest gain in the Dow Jones Industrial Average, as it close with an impressive 7.5% weekly gain and a 41% surge so far this year. Wells Fargo (NYSE: WFC) jumped 2.44% to $30.63, closing below its calculated resistance at $31.04. And Citigroup (NYSE: C) jumped 4.85% to $33.54, expanding its breakout above calculated resistance and adding to its impressive year to date gains of 27.5%.

A lawsuit from New York Attorney General to all-major banks over fraudulent and deceptive foreclosure fillings had little impact in the session, amid a broad rally in the financial space.

Also in the sector and posting the biggest gains in the S&P 500 was Genworth Financial (NYSE: GNW). The insurance and wealth management services provider surged 14% to $9.17 after it also received a boost from its quarterly results. The company missed earnings expectations but revenues were higher than consensus.

Obviously other economic sensitive stocks saw outsized gains, including consumer discretionary stocks, technology, energy, and material stocks. In the consumer space, homebuilders also had sharp gains, as the improved employment picture is seen as bullish for the space. Lennar (NYSE: LEN) and PulteGroup (NYSE: PHM) surged to the top of the sector, gaining more than 7%. PulteGroup posted quarterly results yesterday that beat of the revenue side.

On the same thesis, Caterpillar (NYSE: CAT) was the second best Dow component in the session, with shares jumping 3.27% to $113.94, while Walt Disney (NYSE: DIS) gained 2.8% to $40, posting the fourth biggest gain in the blue chip index.

In the technology space, The Technology SPDR ETF (NYSE: XLK) gained 1.26% to $27.72, posting a new 52-week high of $27.77, basically trading at levels not seen since 2007. Sprint Nextel (NYSE: S) surged to the top of the sector, with shares rallying close to 5% to $2.32.

MasterCard (NYSE: MA) also received a boost from the jobs data that coupled from a better than expected earnings report yesterday, helped the stock to breakout. MasterCard jumped to a new all-time high of $391.30 before the stock closed with a 2.3% gain for the session.

Apple (NASDAQ: AAPL) also hit a new all-time high at $460, however the stock underperformed in the day, as shares added 1% to $459.68 on concern over unfavorable rulings in Germany on Samsung and Motorola Mobility cases and its impacts particularly on the iPhone, iPad, and its new iCloud service. For the week, Apple outperformed the S&P 500 with a gain of 2.77%.

Elsewhere, Gilead Sciences (NASDAQ: GILD) surged close to 11% to $54.7, posting the second biggest gain in the S&P 500. The company posted lower than expected quarterly results but announced that early results from a trial of its experimental hepatitis C drug look promising. Needham bumped its target price to $54,

And Edward Lifesciences (NYSE: EW) plunged to the bottom of the S&P 500 as participants punished the stock after earnings fell short of expectations. EW lost 11.32% to $71.54, closing above calculated support at $62.69.