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Global Market Wrap-Up - January 4, 2013

Friday, January 4, 2013
Mark Hanna
U.S. stocks continued their week long rally as a better than expected ISM Non Manufacturing report and in line employment data kept bulls content. The S&P 500 gained 0.5% while the NASDAQ was fractionally higher. For the week the S&P 500 jumped 4.6%, and the Nasdaq 4.7%; the best weekly performance since late 2011. The employment data continues to have warts all over it as the labor force participation rate remains at multi decade lows, surpressing the unemployment rate by a few %. Healthcare jobs continue to be a main driver which is of course supported by massive federal government spending, whereas the private sector created a lot of low wage jobs in the service industry.
  • The U.S. employment picture continued its gradual improvement in December, adding 155,000 positions as the jobless rate held at 7.8%. Health care, which added 45,000 jobs, and services were the biggest growth areas for the month. Restaurants and bars added 38,000 positions, while construction grew by 30,000.
  • The labor force participation rate, which measures workers and those looking for jobs, remained mired at 63.6%, near a 30-year low.
  • A separate measure that includes those who have given up looking and those working part-time for economic reasons held at 14.4%.
  • The average work week edged higher to 34.5 hours and average hourly earnings rose 7 cents to $23.73. For the year, wages grew 2.1%.
  • The Institute for Supply Management said its services index rose to 56.1 last month from 54.7 in November. The December reading was the highest since February and was well above economists' forecasts of 54.2. A reading above 50 indicates expansion in the sector. New orders rose for a second straight month, with the sub-index hitting a 10-month high of 59.3 in December after 58.1 the prior month. The employment index jumped to 56.3, the highest since March. It stood at 50.3 in November.
Oil added 0.2% to $93.09, while gold fell 1.5% to $1648.90 and silver dropped 2.5% to $29.95 as worries continued to mount that the Fed won't be doing quantiative easing "forever".

British shares gained 0.7%, German shares 0.3% and French shares 0.2%.

Japan and China finally re-opened, with the latter gaining 0.35% while the former added 2.8%. Expectations for further debasement of the yen pushed the currency to its lowest level against the U.S. dollar since July 2010.