Traders work on the floor of the New York Stock Exchange (NYSE) in New York. Photographer: Jin Lee/Bloomberg
Dec. 2 (Bloomberg) -- Bill Gross, co-chief investment officer at Pacific Investment Management Co., discusses the U.S. November jobs report and the outlook for Federal Reserve policy. The jobless rate dropped to 8.6 percent, the lowest since March 2009, from 9 percent, Labor Department figures showed. Payrolls climbed 120,000. Gross speaks with Tom Keene and Ken Prewitt on Bloomberg Radio's "Surveillance." (Source: Bloomberg)
Dec. 2 (Bloomberg) -- Scott Brown, chief economist at Raymond James & Associates Inc., talks about the November U.S. jobs report and the outlook for the U.S. economy. The jobless rate unexpectedly declined to 8.6 percent, the lowest since March 2009, from 9 percent, Labor Department figures showed today in Washington. Brown speaks with Betty Liu on Bloomberg Television's "In the Loop." Stephen Roach, non-executive chairman of Morgan Stanley Asia, also speaks. (Source: Bloomberg)
Benchmark indexes trimmed gains as the euro and Italian bonds erased earlier advances. JPMorgan (JPM) Chase & Co. and Morgan Stanley climbed more than 7.1 percent, leading financial shares as investors speculated the International Monetary Fund will play a larger role in solving the region’s debt crisis. Western Digital Corp. rallied 8 percent after raising its quarterly sales forecast. (WDC)
The S&P 500 advanced 0.5 percent to 1,250.40 at 12:20 p.m. New York time, paring an earlier gain of as much as 1.3 percent. The index has risen 7.9 this week, the biggest weekly advance since March 2009. The Dow Jones Industrial Average climbed 38.37 points, or 0.3 percent, to 12,058.40.
“It’s another incremental step in the right direction for the labor market, but we’re still not out of the rut we’ve been in,” John Canally, who helps oversee about $340 billion as an economist and investment strategist at LPL Financial Corp. in Boston, said in a telephone interview. “More than anything this is still about Europe.”
The benchmark index for American equities is little changed for 2011 after rebounding more than 13 percent from its low for the year on Oct. 3. Improving U.S. economic data has helped alleviate concern that the world’s largest economy will relapse into a recession as Europe’s debt crisis threatens to derail the recovery.
Economic Surprise
The Citigroup Economic Surprise Index for the U.S. has risen to the highest level since March 9. The gauge, which measures the rate at which data is beating or missing economist forecasts, reached 85.7 today and has rebounded from a more-than two-year low of minus 117.2 in June.Today’s jobs data showed that payrolls climbed 120,000, with more than half the hiring coming from retailers and temporary help agencies, after a revised 100,000 rise in October that was more than initially estimated. The median estimate in a Bloomberg News survey called for a gain of 125,000. The jobless rate declined to 8.6 percent, the lowest since March 2009, from 9 percent, Labor Department figures showed.
“Thankfully this wasn’t something that’s going to take the wind out of the sales for the market,” Brian Jacobsen, who helps oversee about $209 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin, said in a telephone interview. “It doesn’t give me a lot of encouragement but it doesn’t give me a lot discouragement either. The market should probably take this one in stride and more people are going to be focused on what’s going in Europe.”
More Resources
The IMF said today it will need more resources to fight Europe’s debt crisis if market conditions worsen. The S&P 500 has rallied this week as the Federal Reserve and five other central banks lowered the cost of dollar funding and China cut the proportion that banks need to hold as reserve capital.Equity futures rose earlier following a report that as much as 200 billion euros ($270 billion) of national central bank loans may be channeled through the IMF. Germany and France are pushing for closer economic ties among euro-area nations and tougher enforcement of budget rules to counter the region’s debt crisis.
Financial stocks posted the largest gains out of 10 groups in the S&P 500, climbing 2.1 percent. JPMorgan surged 7.9 percent, the biggest rise in the Dow, to $32.87, while Morgan Stanley (MS) rallied 7.1 percent to $15.54.
Investors purchased corporations most tied to the economy, as industrial and energy companies advanced while utility stocks dropped 0.7 percent. Alcoa Inc. (AA) added 1.1 percent to $9.92 and General Electric Co. (GE) rose 1.9 percent to $16.21.
Thailand Flood
Western Digital jumped 8 percent to $31.58. The disk-drive maker raised its quarterly revenue forecast after sales rebounded from a flood in Thailand that devastated factories and constrained supplies.
Elsewhere, Zynga Inc. is seeking to raise as much as $1 billion in the biggest initial public offering by a U.S. Internet company since Google Inc. The company is offering 100 million shares for $8.50 to $10 apiece, according to a regulatory filing today. The high end of the range would value San Francisco-based Zynga, the biggest developer of games for Facebook Inc., at $7 billion.
Binky Chadha, the chief U.S. equity strategist at Deutsche Bank AG, reduced his 2012 year-end estimate for the Standard & Poor’s 500 Index by 10 percent to 1,500. Chadha had previously estimated the benchmark equity index would rally to 1,675 next year. He maintained his projection that earnings by companies in the S&P 500 will climb to $106 a share next year.
“A continuation of the euro crisis combined with concerns about U.S. fiscal drag will keep equities in a volatile range,” New York-based Chadha wrote in a note dated today. “We target 1,500 for the S&P 500 by end 2012 on the view that healthy corporate fundamentals, cheap valuations, dividend growth and a strong demand-supply balance will trump concerns about the risks.”
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