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After Market: Surprisingly Strong Jobs Numbers Spark Stock Rally

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Stocks bounced back Friday on a second straight day of surprisingly good economic news. The Dow Industrials (^DJI) gained 167 points, ending the week at another record high of 15,762. The S&P 500 (^GPSC) rose 23 to 1,771, and the Nasdaq (^IXIC) rallied 62 points to 3,919. And after some big swings, the major averages were mostly higher for the full week.

The Labor Department reported the economy added 204,000 jobs last month, despite the 16-day government shutdown in October. That was nearly double the consensus expectation. The market of late hasn't always cheered strong economic numbers because of fears that an improving climate could prompt the Federal Reserve to finally begin to taper its massive economic stimulus program. But in this case, good news was indeed good news.
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Still, bond prices tumbled on signs the economy is gaining strength. That sent the yield on the 10-year Treasury soaring to 2.76 percent.

Among the best performing blue chips: JPMorgan Chase (JPM), up 4 percent; Merck (MRK) up 2 percent; and Walt Disney (DIS), up 2 percent. Disney posted solid earnings and agreed to produce several series of live-action TV shows based on Marvel superheroes, exclusively for Netflix (NFLX).

Airline stocks found plenty of blue sky. United Continental (UAL) rose 4 percent. The airlines are getting help from a stronger economy and declining oil prices.

Other Big Movers on Friday:
  • Priceline (PCLN) rose 5 percent (that's 50 dollars a share) and Groupon jumped 6 percent -- both on continued earnings growth.
  • Gap (GPS) rallied more than 9 percent on much better than expected sales in October.
  • And Santarus (SNTS) soared 37 percent after agreeing to be acquired by Salix Pharmaceuticals for $2.6 billion.
  • On the downside, Twitter (TWTR) ran out of momentum after all of the excitement over its IPO on Thursday. The stock fell nearly 9 percent.
  • And homebuilders got hammered. Pulte (PHA), Lennar (LEN) and Ryland (RYL) all lost about 4 percent, hurt by the steep rise in interest rates. Higher mortgage rates make new homes less affordable, especially for first -time buyers.
  • And NetSol Technologies (NTWK), an IT applications firm, tumbled 30 percent after posting a big drop in earnings.

What to Watch Monday:
  • The bond market is closed for Veterans Day, but U.S. stock markets are open.
  • New Corp. (NWS) and Sotheby's (BID) report quarterly results after the market closes.

 

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Android Is a Gold Mine ... for Microsoft, & 4 More Things to Know Today

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Bloomberg via Getty ImagesSteve Ballmer, CEO of Microsoft, may wish the Windows Phone operating systems sold better, but there's a big silver lining for him in the success of rival Android.

Here's a quick rundown from the world of business and economics this morning: the things you need to know, and some you'll just want to know.

o. In the world of mobile devices, Android means Google (GOOG). But Google's not the only company profiting from the popular OS. Microsoft is pulling in a cool $2 billion a year in revenue from Android patent royalties -- and that's nearly all pure profit, which is helping Microsoft (MSFT) hide the losses from certain other parts of its Entertainment and Devices division.

o. When you think of IPOs, you probably think mostly of rising young companies like Twitter (TWTR). But aging icons of the business world can decide to go public too. Witness next week's IPO of publishing house Houghton Mifflin Harcourt, founded 181 years ago, and this week's offering by Avianca Holdings, which owns several Latin America airlines that first took flight in 1919.

o. If you're wondering why the economic recovery doesn't feel like much of a recovery, it could be because, for a broad swath of Americans, it hasn't been. The poverty rate has been stuck at nearly 50 million for the past two years.

o. You may think of crime and punishment more as functions of government than business, but over the past few decades, that's changed dramatically. Now, a large fraction of prisons are run by private companies, which profit when more people get locked up, and when previous offenders commit new crimes and get sent back inside. Which is why it's probably no coincidence that, as bestselling author and actor Hill Harper points out in his new book, about 30 years ago, America had about 300,000 incarcerated people, and today, it has 2.4 million.

o. And finally, there's nothing in federal law that requires employers to give workers paid sick leave, but a few cities and counties have been passing laws that mandate it locally. In response, big business has been fighting back -- hard. After intense (and expensive) lobbying by business groups, 10 states have passed laws that preemptively ban local governments from enacting paid sick days laws, and at least 14 more are considering them. (Funny thing, though: The best research done so far shows that paid sick leave laws either don't cost businesses much at all, or save them money.)

 

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