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Pre-Market Primer: Equities Charge Ahead as US Jobs Data Surges


Jobs growth of 236,000 surprised even the bulls.

Stocks are rising again today as employment growth in the US crushed expectations.

Non-farm payrolls increased by 236,000 and the unemployment rate fell to 7.7% from 7.9%. Economists expected to see 165,000 new jobs and the unemployment rate to stay steady at 7.9%.

December's report was also revised up to 219,000 jobs added from 192,000, and January's was revised down to 119,000 from 157,000. As for the drop in the unemployment rate, it can't be blamed on a lower participation rate this time. That number held still at 63.5%.

The only sectors that shed jobs were government, with headcount down by 10,000, and information services, which fell by 1,300. Construction companies added 48,000 and the healthcare continued to be a source of job growth, adding 39,100 workers.

Before the bell, Dow (INDEXDJX:.DJI) futures were up 0.27% at 14,295. Futures on the S&P 500 (INDEXSP:.INX) climbed 0.27%% to 1,541.80 and Nasdaq (INDEXNASDAQ:.IXIC) futures rose 0.17% to 2,799.75.

Later today, the Commerce Department will release wholesale inventories for January, which economists say will rise 0.3% after falling 0.1% in December.

Yesterday the Federal Reserve released the results of stress tests on the biggest banks. The Fed found that Goldman Sachs (NYSE:GS), JPMorgan Chase (NYSE:JPM), and Morgan Stanley (NYSE:MS) all overestimated their own capital strength. Goldman, for example, estimated that its Tier 1 capital ratio, its core equity, could fall 8.6% in an extreme economic downturn, but the Fed says that it would fall to 5.8%. Out of the 18 banks tested, Ally Financial (NYSE:GMA), which the US government has a majority stake in, was the only firm that would not survive a deep recession. Citigroup (NYSE:C) was the most over-capitalized. As a result, the Fed might approve a $1.2 billion share buyback for the bank. Citigroup shares rose 1.7% this morning on the news.

German industrial output fell short of forecasts in January. The indicator showed zero growth, missing estimates of a 0.5% increase.

China's exports grew far more than expected last month. Exports rose 22% over last year, blowing past expectations. Imports slumped however, falling 15.2%.

Japan also released better-than-expected news. The government revised GDP up to 0.2% annualized growth, from previous estimates of a 0.4% contraction. The weaker yen and public and consumer spending helped boost the economy. Capital expenditure dropped by less than initially thought. Japan's trade deficit narrowed to 1.48 trillion yen in January from 1.51 trillion yen in December. The Nikkei (INDEXNIKKEI:.NI225) closed up 2.6% today.

Google (NASDAQ:GOOG) will lay off another 1,200 people at Motorola Mobility, or about 10% of the unit's workforce.

Pandora (NYSE:P) shares rose 25.88% in after-hours trading after the company reported a smaller loss than expected. Revenue of $125.1 million exceeded Wall Street's expectations and the Internet radio company lost $0.04 per share, a penny less than analyst forecasts. CEO Joseph Kennedy also stepped down unexpectedly.

Twitter: @vincent_trivett
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