After the stock markets posted strong gains in the bourses in the week ended February 3, the question among the investors mind is that whether it can hold on and sustain to extend the gains in the coming week. The Dow Jones Industrial Average and Nasdaq witnessed strong winds following a robust job data for the fifth straight month. Of the major three indices, the S&P 500 is the only index that is waiting in the wings to break the yearly high.
Now that the earnings of most of the big wigs have come out, the market will be expecting some positive catalyst to emerge from the economic side for consolidating the gains. The European concern is hanging like a sword of domiciles on the stock markets to drag down the sentiments anytime.
The Dow Jones Industrial Average (DJIA) closed February session with a multi year high, while Nasdaq closing indicate an eleven year high.
For the week ended, DJIA gained 201.77 points or 1.6 percent to close 12,862.23, while Nasdaq closed with an addition of 89.11 points or 3.16 percent to 2905.66. S&P 500 too posted a gain of 28.57 points or 2.17 percent to end the week at 1344.9. The broader S&P 500 is short of 28.57 points or 1.9 percent to reach 52 week high of 1370.58.
Most of the weekly gains came from Friday's session when Government data on job hiring front and non-farm payrolls boosted the sentiments. The job data is viewed as a strong start of the year. This is also forcing economists to come up with revised economic outlook. In a note to clients, Wells Fargo revised up its GDP outlook to 1.4 percent for the first quarter and to 1.9 percent for the year 2012. The financial institution also sees an average of 155 thousand jobs per month to be added this year.
The hiring was witnessed in the professional and business services, leisure and hospitality and manufacturing sectors. But the federal and local government sectors continued to cut jobs. Importantly, the leading indicator of future job gains, average hours worked grew for January indicating that the improvement in the labor market may continue its uptick. On the flip side, unseasonably warm weather might have contributed to strong headline employment numbers. This could hurt the sustainability of hiring.
It was a mixed one for personal income and spending data in December. Personal incomes grew 0.5 percent to report the highest gain in 10 months. Disposable personal income also increased slightly for the month due to lower prices for energy products and services. Consumers have pulled back their spending even in the light of higher personal income as the savings rate rose to 4.0 percent. Wells Fargo expects consumer spending to remain somewhat constrained in the first quarter rising around 1.8 percent.
Increase in new orders in January enabled ISM-Manufacturing index inch further.