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Stocks finish the week on a firm note despite mixed jobs report

It was a mixed bag for the October jobs report, which came in below expectations, albeit after a sharp revision to September's figure
Non-farm payrolls
Nonfarm payrolls jumped 261,000 in October, with the three-month average at 162,000 jobs.
  • Dow Jones Average up 26 at 23,542

  • S&P 500 up 6 at 2,586

  • Pandora pummelled after fourth quarter guidance underwhelms

After an early wobble, stock prices picked up to sit in positive territory during the lunchtime session.

The Dow Jones average was up 26 at 23,542 and the S&P 500 was up 6 at 2,586 as traders picked over the bones of the October jobs report.

“Non-farm payrolls rose 261,000 in October, lighter than the consensus estimate of 313,000; however, revisions generally expected,” said Japanese brokerage, Daiwa Capital Markets.

“The unemployment rate represented the most striking aspect of the report, with a drop of 0.1 percentage point following a decline of 0.2 percentage point in the prior month. The latest change was a 'soft' decline in that it was driven by a drop in the size of the labor force that exceeded a decline in employment as measured by the household survey,” Daiwa added.

“Average hourly earnings were unchanged in October, but we view this as hurricane-related noise,” it added.

Moving on to corporate news, music streaming media play Pandora Media Inc (NYSE:P) lost a quarter of its value after its out outlook for the fourth quarter came in below expectations.

“Q3 results were in-line with guidance while below our expectations; forward guidance largely disappointed, reflecting ongoing headwinds,” said Wedbush Securities, which has a 12-month price target of US$12.

The shares were trading at US$5.46 in lunchtime trading.

“While we remain optimistic given management’s initiatives and focus on improving ad products, efforts to right the ship will likely take time,” the broker admitted.

“The company has done a good job of controlling costs, achieving near break-even results for Q; however, its guidance for Q4 suggests another slight loss in a typically strong quarter, and portends a return to greater losses in Q1 should advertising be seasonally weak,” it added.  

Open

Stocks made a firmer start as expected, but were unable to hold on to early gains.

The Dow Jones average was down 12 at 23,505 while the broader-based S&P 500 was a point softer at 2,579.

The tech-heavy Nasdaq Composite, buoyed by index heavyweight Apple Inc (NASDAQ:APPL), was clinging on to a two point gain at 6,717.

Apple's shares were up 2.1% at US$171.65 after results released after the bell yesterday topped expectations.

READ Apple earnings beat expectations as iPhone X finally goes on sale in stores

Elsewhere on Nasdaq, Insignia Systems Inc (NASDAQ:ISIG) shot up 46% to US$1.98 after reporting growth in both the top and bottom lines for the third quarter of 2017.

Net sales increased 19.4% from a year earlier to US$7.72mln while net income was positive at US$451,000; the previous year in the same period the in-store advertising specialist had posted a loss of US$167,000.

Pre-open

The US economy added 261,000 jobs in October, while the unemployment rate dipped to 4.1%.

The non-farm payrolls increase was the best achieved under Donald Trump's presidency, while the unemployment rate was the lowest since December 2000.

“The US labour report for October has reversed the hurricane related distortions of the September release. Payrolls rose 261,000 versus the 313,000 consensus, but there were a net 90,000 upward revisions so on balance it is a strong report and backs the case for a December rate hike,” suggested James Knightley, the chief international economist of finance house ING.

“With the economy growing strongly and tax reform likely to add further fuel to the fire, the case for higher US interest rates continues to build. Barring an economically damaging government shut-down in early December we expect the Fed to hike rates on Dec 13 with at least two further rate rises probable under new Fed Chair Jerome Powell next year,” he added.

Spread betting quotes on the main index benchmarks the Dow Jones Average and the S&P 500 both turned south after the release of the jobs report, but both were still expected to open above last night's close..

The Dow Jones was tipped to open at 23,528, up 12 points, while the S&P 500 was seen opening at 2,580.3, up half a point.

On the corporate front, restaurants group Bloomin' Brands Inc (NASDAQ:BLMN) lowered its full-year guidance after a tough third quarter.

Net income in the third quarter fell to US$4.3mln from US$20.7mln the year before.

Adjusted earnings per share of 12 cents were three cents below the consensus forecast.

At least revenue was ahead of expectations: it fell to US$948.9mln from US$1bn the year before, but beat expectations of US$948mln.

Canadian drugs maker Valeant Pharmaceuticals Intl Inc (NYSE:VRX, TSE:VRX) has had its scandals in the past but its rehabilitation into the market's good books continued today as its Vyzulta glaucoma treatment got the green light from the US Food and Drug Administration (FDA).

The shares rose 4% to US$11.50 in pre-market trading.

Talking of controversial companies, Moody's Corporation (NYSE:MCO) – the debt ratings agency that (along with its peers) totally misread the collateralised debt obligations market in the run-up to the financial crisis of the previous decade – reported adjusted earnings per share of US$1.52, ahead of expectations of US$1.44.

Revenues of US$1.1bn were ahead of the consensus forecast of US$983.4mln.


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