Stocks Flat, But Dow Closed at its Highest level in Five Years

Published on Friday, 05 October 2012 17:45 Written by Christopher Lynn

New York, October 5^th (TradersHuddle.com) – Stocks closed narrowly mixed for the session, but still the Dow was able to log its best closing level in five years. An earlier rally fueled by the government’s September employment report, which showed lackluster job growth but a surprising drop in the Unemployment rate, lost steam towards the end of the session.

The Dow Jones Industrial Average gained 34.79 points, or 0.26%. The S&P 500 index slid less than 1 point or 0.03%, while the NASDAQ fell 13.27 points, or 0.42%.

For the week, the Dow jumped 1.29%, while the S&P 500 rallied 1.41% and the NASDAQ gained 0.64%.

The market started in positive territory, as futures gained traction following the jobs report that showed that the U.S. economy added 114,000 jobs, largely inline with consensus of 120,000. The report showed an unexpected drop on the unemployment rate to 7.8% from 8.1%, well below consensus of 8.2%. The report was being closely watched also in the political world, as the presidential election looms near. Overseas, news flow was light, with markets reacting to yesterday’s ECB comments on their bond-buying program and on the Bank of Japan’s decision to leave monetary policy stable.

Sectors on the S&P 500 showed a mixed bag, with materials, consumer staples, and industrials logging the biggest gains, while technology, energy, and utilities posted the biggest declines.

The technology sector was under pressure, losing more than 1% and weighing heavily on both the tech heavy NASDAQ and the broad S&P 500 Index. First Solar (NASDAQ: FSLR) stumbled more than 11% to the bottom of the sector and the S&P 500 after it was downgraded to a Negative at Avian Securities. The firm reliability issues related to the junction box on modules supplied by the company. The stock was also impacted from a broad selloff in solar stocks, particularly as crude oil settled below $90 per barrel.

Apple (NASDAQ: AAPL) contributed to the weakness, as shares fell more than 2% to $652.59, with the stock breaking below its 50day moving average at the $655 area. The stock has broken the 50day before and often has been a good buying opportunity. Rival Samsung reported record quarterly profit. In after hours, there were reports that 4000 Foxconn workers were on strike over iPhone 5 quality control measures and inadequate training. Apple lost 2.7% for the week.

F5 Networks (NASDAQ: FFIV) was another notable mover, with shares tumbling 3.7% to $103.43. F5 was downgraded to Equal Weight from Overweight at Barclays.

On the flip side, materials climbed 0.5%, with Owens Illinois (NYSE: OI) jumping to the top of the sector. The stock rallied more than 4% after it was upgraded to a Buy from Neutral at Goldman Sachs.

Consumer stocks saw upside after the jobs report figures showed improvement in the labor market. Home Depot (NYSE: HD) rallied to the top of the Dow Jones Industrial Average, with shares jumping 2.4% after logging a new 12-year high at $63.20.

Meanwhile, Netflix (NASDAQ: NFLX) slid 0.16% to $66.56 in the session, basically holding on to its sharp surge this week. The stock rallied more than 22% in the week amid reports that showed that customer satisfaction has improved.

Avon Products (NYSE: AVP) surged to the top of the broad market index, rallying more than 7% after the company announced long-time controversial Chairman Andrea Jung will step down at the end of the year and will be succeeded by Fred Hassan.

Elsewhere, social media was under pressure after Zynga (NASDAQ: ZNGA) cut its full-year outlook. The stock logged a new all-time low after the company offered a weakened guidance for the full 2012 to reflect third quarter results and revised expectations for the fourth quarter for certain web games.

Facebook (NASDAQ: FB) slumped 4.7% to $20.91, losing more than 5% for the week, after the lowered outlook from Zynga. Facebook received about 14% of its revenue from Zynga in the first half of the year. Morgan Stanley added to the bearishness by cutting its target price to $28 from $30.