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Strong NFP Ignites Risk Rally, Gold Smashed on Strong Dollar


Today's financial recap and tomorrow's financial outlook.

Risk assets had a huge rally Friday after the highly-anticipated NFP report come in ahead of expectations.

Nonfarm payrolls rose by 248,000 in September, beating the 215,000 expected by surveyed economists. August's figure was revised up to 180,000 from 142,000. Private payrolls also exceeded estimates.

The unemployment rate fell to 5.9%, under the 6.1% consensus, partially because of a decline in the labor force participation rate.

Average hourly earnings disappointed with a 2.0% year-over-year increase vs. the 2.2% average forecast.

US equity markets were volatile in the aftermath of the NFP report, but stairstepped higher into the close, led by risky sectors.

The NASDAQ Biotechnology Index rose 2.4% today, while the Global X Social Media Index ETF (SOCL) popped 1.8%. High-yield bonds, which have trended lower in recent weeks, rallied as spreads tightened. We also saw strength in Chinese technology companies, retail, housing, and financials.

Action camera maker GoPro (GPRO) squeezed up 1.8% to $86.97 after announcing a merchandising partnership with consumer electronics retailer Best Buy (BBY).

Radioshack (RSH) shares were halted after agreeing to a $590 million financing deal with hedge fund Standard General LP. The stock rose 35% in premarket action before trading was suspended.

The S&P 500 finished at 1967.90.XX, up 1.1%.

The bullish response to NFP was likely catalyzed by traders reducing too much risk over the past month, a trend best illustrated by relative weakness in the Russell 2000 and aforementioned high-yield bonds. The headline number was solid enough to overcome negative details like hourly earnings.

From a technical perspective, the S&P 500 fell below its 100 day moving average on Wednesday. Since 2011, breaks of that line have represented buying opportunities. The rebound today pushed the S&P right back above the 100, fulfilling the pattern.

On the downside, commodity stocks took a beating today as the US Dollar skyrocketed post-NFP.

Gold fell 1.9%, taking down mining stocks with it. The Market Vectors Gold Miners ETF (GDX) fell 4.8% on the day.

Crude oil was also weaek, pulling down energy shares to levels not seen since March.

Monday's Financial Outlook

There are no US economic data releases or major earnings reports scheduled for Monday.

The first round of votes for Brazil's Presidential election will be reported Sunday. Market observers are concerned that President Rousseff will be re-elected over newcomers seeking economic reforms. 

Additionally, traders should watch for news related to Ukraine, the Middle East, Hong Kong, and the Ebola breakout as all could drive volatility.

Twitter: @Minyanville

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No positions in stocks mentioned.

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