While you were sleeping: Stocks rally to end quarter

Thursday 1st October 2015

Wall Street climbed following a better than expected private US jobs report and as investors wrapped up a tough quarter marred by concern about slower global economic growth.

An ADP report showed US private employers added a better than expected 200,000 jobs in September, up from a downwardly revised 186,000 in August.

On Friday a government report is expected to show US employers hired 203,000 workers in September, while the unemployment rate will hold at 5.1 percent, according to a Reuters survey.

A separate report showed the Chicago purchasing management index dropped more than expected in September, sliding to to 48.7 from 54.4 in August.

Even so, ”in aggregate, growth still looks strong to keep the unemployment rate trending down," Jim O'Sullivan, chief US economist at High Frequency Economics in Valhalla, New York, told Reuters.

In New York trading at about 2.35pm, the Dow Jones industrial average climbed 1 percent, while the Standard & Poor’s 500 Index gained 1.4 percent, and the Nasdaq Composite Index rallied 1.8 percent.

Advances in shares of Intel and those of Nike, last up 3 percent and 1.6 percent respectively, propelled the Dow higher.

"The market is in a relief rally after five days of selloff and as investors rebalance their portfolios,"Art Hogan, chief market strategist at Wunderlich Securities in New York, told Reuters.

While the latest US jobs data underpinned the gain on Wall Street, the increase was also driven by the fact that it was the final day of a tough quarter.

“This is the worst quarter in four years, since 2011,” Andrew Brenner, the head of international fixed income for National Alliance Capital Markets, told Bloomberg. “If stocks had had a great quarter, they’d be selling the stocks and buying the bonds but that’s not the case today.”

While US Treasuries fell on Wednesday, they posted a solid quarter as investors flocked to the perceived safety of fixed-income securities amid concern about global growth. The yield on he benchmark US 10-year note fell about 28 basis points since June 30, the biggest quarterly drop since the last three months of 2014, according to Bloomberg.

Indeed, International Monetary Fund managing director Christine Lagarde warned that “global growth will likely be weaker this year than last, with only a modest acceleration expected in 2016.”

The IMF’s global projections will be released next week, when it also hosts its semi-annual meetings in Peru.

“We see global growth that is disappointing and uneven,” Lagarde said in a speech in Washington. “In addition, medium-term growth prospects have become weaker. The ‘new mediocre’ of which I warned exactly a year ago – the risk of low growth for a long time – looms closer.”

In Europe, the Stoxx 600 Index ended the day with a 2.5 percent gain from the previous close. France’s CAC 40 Index increased 2.2 percent, while Germany’s DAX Index and the UK’s FTSE 100 Index both jumped 2.6 percent.

BusinessDesk.co.nz

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