Wall Street rises after payrolls data

US equity markets rose sharply on payrolls data and a strong ISM reading, both pointing to the US economy being on a better footing than previously thought.

Non-farm payrolls figures showed the US economy added 157,000 jobs in January, while the numbers for November and December were also revised higher, suggesting the labour market was improving at the end of 2012.

The increase in the ISM manufacturing index also indicates that the improvement in global factory conditions, evident in the rebound in various global PMIs, has spread to the US.

The S&P 500 index rose 1 per cent on Friday and added 0.7 per cent over the week to 1,513.16 recording the fifth consecutive weekly gain this year. All major sectors rose with telecoms and financial stocks leading the gains.

“US equity markets have the power of the freight train in the form of the quantitative easing by the Fed and we would not be surprised if the rally continued for a while,” said Martin Leclerc, chief investment officer at Barrack Yard Advisors.

“We are not negative on stocks as an asset class, but we favour careful investment selection rather than asset allocation, as we consider current valuations as too high,” he added.

The CBOE Vix index, which measures implied volatility on the S&P 500 index, fell 9.5 per cent to below 13, irking some analysts who find the markets unusually complacent.

“A moderate level of volatility is something to be welcomed in our opinion, not feared,” wrote Scott Wren, senior equity strategist at Wells Fargo Advisors.

Netflix shares gave up earlier gains to close slightly lower at $164.80 and shedding 2.8 per cent over the week. The stock rose as high as 4 per cent earlier after news that a survey conducted by Frank N. Magid Associates revealed 25 per cent of US households now use the video streaming service, up from 20 per cent a year ago.

The stock was also upgraded by an analyst at Albert Fried, who said the company might buy AMC networks.

Netflix surprised investors last month by reporting a fourth-quarter net income when the consensus estimates were for a quarterly loss. Shares stand 78 per cent higher since the start of the year.

BlackBerry shares lost more than a quarter of their value during the past week, in spite of the launch of its new generation of smartphones on Wednesday.

BlackBerry, formerly called Research In Motion, unveiled Z10 and Q10 devices globally. However, the company is not able to start selling them in the US until some time in March, due to delays in carriers testing the phones on their networks. Shares closed 0.4 per cent higher at $13.02 on Friday.

Facebook shares lost 5.7 per cent to $30.26 over the past week, after falling 4 per cent on Friday. The social networking site reported late on Wednesday that fourth-quarter net profits topped analysts’ estimates. But investors tempered their views on the company’s performance for 2013, citing increased research and development spending.

Verizon shares rose 2.2 per cent to $44.56 after analysts at Piper Jaffray upgraded the stock to “overweight”, citing its wireless network as best-in-class and its ability to increase dividends in 2013. Shares gained 4.4 per cent over the week.

Rival AT&T also attracted buyers, with shares adding 2.1 per cent to $35.51 and rising 4.4 per cent on the week.

In IPO news, Zoetis, which raised $2.24bn in its initial public offering on Thursday, began its first trading day with a jump. The company sold 86.1m shares at $26 each, above its initially planned range of between $22 and $25 per share.

Shares in the animal-health business, spun off from Pfizer, soared 18.4 per cent to $30.79 on Friday.

The Dow Jones Industrial Average, rose 1.1 per cent to 14,009.79, breaching the 14,000 level for the first time since 2007. The oldest benchmark gained 0.8 per cent over the week.

The technology-heavy Nasdaq Composite gained 1.2 per cent to 3,179.10 – up 0.9 per cent on the week.

Dell shares gave up some of its steep gains to finish the week 3.6 per cent higher at $13.63 on reports that a buyout deal could come early next week. Dell shares have gained more than 34 per cent since it emerged last month that private equity firms were in talks to take the PC maker private.

In earnings news, Merck reported fourth-quarter results that were better than analysts’ forecast. However, the drugmaker’s shares dropped after the company said its 2013 earnings would decline. The stock fell 3.3 per cent to $41.83 and shed 3.7 per cent over the week.