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After The Close - Stocks faded into the close on Friday but mostly held onto the week’s gains, supported by more upbeat news on trade relations.

Investors started the morning with news from the Labor Department that the economy added 130,000 jobs in August. That headline number fell short of expectations of 150,000 or more positions thought to be added, and was even helped by the addition of 25,000 temporary government census workers. The data for June and July were also revised lower.

Nevertheless, the three-month average for payroll additions remains healthy; the unemployment rate is historically low; and wage gains over the past year have been solid.

Wall Street took the employment data in stride, keeping expectations largely intact for the Federal Reserve to lower interest rates by a quarter of a point later this month. The Fed has begun responding to a slower pace of economic growth, having reduced interest rates in July for the first time in more than ten years.

With the jobs report not proving a game-changer for either the bulls or the bears, the optimism over the planned resumption of trade talks next month between the Unites States and China continued to underpin sentiment for most of the trading day.

Over the previous two sessions, the Dow Jones Industrial Average climbed more than 600 points, helping to recoup the losses incurred in August.

The upbeat tone aside, there is no trade deal is on the table yet, and investors have been disappointed by setbacks in negotiations on several occasions in the past. The hope is that this time around time around will result in a productive outcome.

News that China is reducing reserve requirements in its banking system in a move to stimulate lending also provided a firm undertone.

In terms of stock market segments, the more economically sensitive sectors performed better today than defensive groups, such as REITs and utilities, which had proven a safe haven during the recent stretch of volatile trading.

Shares of information technology stocks lagged after several state attorneys general announced antitrust probes for some high-profile names, such as Facebook (FB). That weighed on performance of the NASDAQ.

At the close, the Dow Jones Industrial Average was up 69 points higher; the S&P 500 gained three points; but the NASDAQ slipped 14 points.

Stocks rose nicely for the first week of September from oversold conditions. - Robert Mitkowski

At the time of this writing, the author did not have positions in any of the companies mentioned.


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Before The Bell - After up-and-down Tuesday and Wednesday market sessions, in which stocks initially headed notably lower and then sharply higher, equities picked up dramatically yesterday morning. And once again, it was optimism regarding pending trade talks with China that lit the fire on Wall Street. Specifically, following a 285-points drop in the Dow Jones Industrial Average to start the holiday shortened four-day span, on the imposition of new tariffs by the United States and China, the equity market came roaring back Wednesday on a sense that the selling the day before had been overdone.

Then, yesterday, news that the two countries were likely to hold trade talks next month and a new-found optimism regarding those discussions, the market really its stride with the Dow quickly sailing ahead by almost 500 points within minutes after the open. In the meantime, in addition to trade optimism, the market also was helped by a much better-than-expected report on private-sector payrolls, in which Automatic Data Processing (ADP) reported that 195,000 new jobs had been added in August. That was well above the 140,000 monthly estimate. In that same vein, just moments ago, the government reported that 130,000 new positions had been added last month.

As for the ADP report, it was better than forecast and the previous month's tally. Also encouraging was the release of an upbeat survey on non-manufacturing activity. The report, from the Institute for Supply Management (ISM) came in much better than expected, and unlikely the companion issuance on manufacturing, which had been put out last Tuesday, this metric showed a sector that clearly was gaining traction. In all, the ISM survey came in at 56.4 for August; expectations had been for a tally of 54.0. The July release had been 53.7.Strength in new orders and pricing led the way.  

The market's gains then held until just before, when the major averages saw a modicum of profit taking, as optimism about trade largely overcame any late jitters regarding the just-released report from the Labor Department on non-farm payrolls. As the session ended, the Dow, buoyed by the encouraging trade situation, still had jumped 373 points, bringing that index back up to 26,728. The S&P 500 Index added 38 points and the NASDAQ rose an eye-catching 140 points, with many more gaining than losing issues on the Big Board, as most groups rallied.

As for the new day, which figures to be dominated by trade news and the reaction to the Labor Department’s reports on job growth and the unemployment rate. Ahead of those reports, meanwhile, stocks were mostly higher in Asia in the overnight hours; in Europe, the key bourses are showing little early movement. Also, oil prices are mixed; gold quotations are lower; and Treasury yields, on the 10-year note, which ended matters yesterday at 1.57%, now are at 1.56%. All of this is portending a higher start to the trading day when the bulls and the bears get going shortly. Meanwhile,

The Labor Department reported that the nation saw its employment go up by 130,000 last month; expectations had been for an increase of 150,000. In July, the nation had added 159,000 jobs. June payrolls were revised downward by 15,000, meanwhile. In other news, the jobless rate held steady at 3.7% last month, while the labor-force participation rate inched up to 63.2%. Finally, average hourly wages ticked upward by $0.11 in August. The July increase had been $0.09. All in all, this was a mildly disappointing report, but should, if anything, increase the odds of a Federal Reserve interest-rate cut later this month.  - Harvey S. Katz, CFA

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.