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Stocks Improve After Jobs, Services-Sector Reports


The U-6 rate, which is the broadest measure of unemployment, held steady at 14.4%.

Average hourly earnings rose 0.3%, the same as the prior month's upwardly revised data. They were expected to have risen 0.2%.

The average workweek inched up to 34.5 hours from 34.4 hours. Hours worked were expected to stay at 34.4 hours.

In other economic news, the ISM services index registered 56.1 in December, 1.4 points higher than the 54.7 registered in November, showing continued growth at a slightly faster rate in the non-manufacturing sector. Much of this was driven by gains in employment. On average, economists were expecting a read of 54.2.

The employment index in the ISM non-manufacturing report increased by 6 points to 56.3, indicating growth in jobs for the fifth consecutive month at a significantly faster rate.

David Onyett-Jeffries, an economist at RBC, said that Friday's services-sector report, whose headline index has surprised to the upside in recent months, and the complementary ISM manufacturing report released earlier in the week point to the U.S. economy gaining momentum to the end of the year despite concerns over the potential effect of the so-called fiscal cliff.

"With U.S. policymakers reaching an agreement to avert income tax increases on the majority of U.S. workers, some of the uncertainty lingering over the economic outlook has been diminished," said Onyett-Jeffries. "This, combined with the highly accommodative monetary policy stance of the Fed, should pave the way for the U.S. economy to maintain its upward trajectory during the coming months."

The Commerce Department said Friday that factory orders were unchanged in November after rising 0.8% in October. They were predicted to rise 0.4%.

Major U.S. stock averages dipped Thursday following a downtrodden tone from the latest minutes of the Federal Open Market Committee, the policy-making wing of the Federal Reserve . The surprise news outweighed stronger-than-expected employment data for December and a number of upbeat monthly retail-sales reports.

Looking into the first quarter, Steve Billimack, Chicago advisory group managing partner and director at Hightower, said he expects volatility, as "intense political debate around the sequester and the debt limit are watched and evaluated for any real structural reform by the private sector, rating agencies and the markets."

"It was great to see a relief rally January 2nd after avoiding the worst case fiscal cliff scenarios. The rally also benefited from the late 2012 trend of broad-based global central bank stimulus," Billimack said. "While the Biden/McConnell compromise showed modest cooperation to extend tax cuts, the debate re-intensifies with the new Congress having to address the more difficult issues of both spending cuts and the debt limit."

Gold for February delivery plunged Friday by $25.70 to settle at $1,648.90 an ounce at the Comex division of the New York Mercantile Exchange, while February crude oil contracts tacked on 17 cents to close at $93.09 a barrel.