US Stocks Climb as Crude Oil Jumps, Energy Rallies

New York (Oct 2)  Stocks held onto highs by late afternoon Friday as the energy sector rose amid a rally in crude oil prices.

The S&P 500 added 0.49%, the Dow Jones Industrial Average slid 0.44%, and the Nasdaq gained 0.72%. Benchmark indexes had been more than 1% lower earlier in the session.

Crude oil prices closed higher after the active oil-rig count fell by 26 to 614 over the past week, according to Baker Hughes data. West Texas Intermediate crude rose 1.4% to $45.37 a barrel. 

The energy sector was among the top performers on Friday. Exxon Mobil (XOM - Get Report) , PetroChina (PTR - Get Report) , Royal Dutch Shell (RDS.A - Get Report) , Chevron (CVX - Get Report) , BP (BP - Get Report)  and Total (TOT) climbed, while the Energy Select Sector SPDR ETF (XLE) added 2.9%.

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Biotech stocks clawed back from some of the losses suffered over the past two weeks on Friday. The industry has been under pressure since Democratic presidential candidate Hillary Clinton spoke out against so-called "price gouging" of specialty drugs. Pfizer (PFE) , Bristol-Myers (BMY) , Celgene (CELG)  and Eli Lilly (LLY) were among the best performers, while the iShares NASDAQ Biotechnology Index ETF (IBB)  rose 1.7%.

Friday's weak U.S. jobs report took on greater significance as Wall Street looked for signs U.S. economic strength is still intact after the Federal Reserve's decision to keep interest rates unchanged in September.

"We've moved well beyond the 'bad news is good news' scenario," said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research on market reaction to the report.

"At this point, to use a metaphor, the patient has been in ICU for a very long time and people are ready for it to get out and walk on its own so, therefore, bad news is no longer good news," he added. "Now we need actual good news to have good news and good news is going to be strong payrolls, it's going to be strong employment numbers, it's going to be an uptick in inflation."

Though September jobs fell short of estimates, one top Fed official argued that nothing has fundamentally changed to deter the central bank from raising rates. A longer-term trend in labor market tightening and the likelihood of continued economic growth still warrants a move off of crises-level rates, St. Louis Fed President James Bullard said in a speech.

"A simple and prudent approach to current policy would be to begin normalizing the policy settings in an effort to extend the length of the [economic] expansion and to avoid taking unnecessary risks associated with exceptionally low rates and a large Fed balance sheet," he said in a speech at the Manhattan Institute for Policy Research.

The U.S. economy added 142,000 jobs in September, according to the Labor Department, well under estimates of 200,000. The unemployment rate held steady at 5.1%. Year-over-year growth in average hourly earnings held steady at 2.2% compared to expected growth of 2.4%.

August's payrolls figures were revised sharply lower to 136,000 from 173,000, while July was cut to 223,000 from 245,000. Investors had hoped August, a historically hard-to-read month, would see an upward revision. Over the past decade, August was the month with the lowest first estimate which was then revised in the following two months, according to a Reuters analysis. Since 2005, the government has added an average 58,000 more jobs to payrolls in August than initially reported.

"This is unambiguously soft especially with two months of downward revisions and a flat [average hourly earnings] rate," said David Ader, market strategist at CRT Capital, in a note. "There's nothing more to say and if you thought the Fed might hike in October, forget it. December loses more potential."

Factory orders in August fell 1.7% in August, according to the Commerce Department. Orders for goods produced in U.S. factories were expected to fall at a slower pace, down 1.3%.

T-Mobile (TMUS) shares were down more than 1% after a major breach of personal information at Experian, the credit-tracking firm the telecom uses for credit checks. Hackers gained access to names, addresses and social security numbers, but no credit card or banking information.

Micron Technology (MU) added more than 6% after the chipmaker reported a better-than-expected fourth quarter. Shares were higher even as first-quarter guidance came in below forecasts. The company anticipates current-quarter profit no higher than 26 cents a share compared to analysts' estimates of 38 cents.

Progress Software (PRGS) dropped 10% after quarterly revenue and sales forecasts missed estimates. The enterprise software company expects first-quarter sales as high as $118 million, around $3 million below expectations. No reason was given for softer sales growth.

Mondelez (MDLZ) fell nearly 1% on reports it is exploring the sale of its European cheese and grocery businesses. The company is looking to unload periphery units to focus on its snack foods and refreshments businesses, according to Reuters. A sale could be valued at around $3 billion.

Bank of America (BAC) slid 5% as a class-action shareholder suit against the bank moved forward. The suit alleges Bank of America's Merrill Lynch investment banking unit shortchanged shareholders in the $1.5 billion deal to sell Zale to Signet Jewelers (SIG) . Bank of America advised Zale on the sale.

Source: Bloomberg