Friday was a positive day for the stock market, and major market benchmarks managed to post gains of as much as half a percent to close out the week. In a return to the counterintuitive thinking that used to be commonplace among market participants, investors seemed pleased with the news that the gain in U.S. jobs during August was more sluggish than most had expected. The economy created just 151,000 in August according to the Bureau of Labor Statistics, and that prompted most investors to conclude that the Federal Reserve isn't likely to raise short-term interest rates at its monetary policy meeting later this month. Company-specific moves also prompted optimism among investors, and MercadoLibre (NASDAQ:MELI), Yamana Gold (NYSE:AUY), and Denbury Resources (NYSE:DNR) were among the best performers of the day.
MercadoLibre gets a big recommendation
MercadoLibre rose 7% after the Latin American e-commerce specialist received positive comments from analysts at JPMorgan. Despite facing tough economic conditions in Brazil and elsewhere among its core markets, MercadoLibre has done a good job of driving demand among shoppers. Moreover, its efforts to build out ancillary services, including its MercadoPago payment facility and its MercadoEnvios shipping options, have paid off with greater brand loyalty and helped the company create a vertically integrated powerhouse. Most importantly, the ability to offer installment payment plans with zero interest has been a huge boon in a region that's plagued with devaluations. Even though the stock has already posted solid returns, analysts believe more could be ahead, and a rebound in Latin American economic conditions could produce even more gains.
Yamana Gold looks shinier
Yamana Gold gained 8% on a strong day for the gold market. Bullion prices climbed more than $10 per ounce to approach $1,325, and many market participants blamed the sluggish data in the employment report for the bullish move. Gold tends to do better when interest rates are low, because the opportunity cost of having cash locked up in physical bullion isn't as high when alternative investments aren't producing that much income. For its part, Yamana has been one of the lowest-cost producers of gold in recent years, and that has given the company an edge against its competitors in dealing with low bullion prices. Now that gold is rebounding, Yamana has an opportunity to take advantage of wider profit margin figures to bolster its total earnings, and the recent gain in its share price reflects investors' hopes that Yamana will succeed in doing just that.
Denbury gets more energetic
Finally, Denbury Resources picked up 11%. The company benefited from a bounce in oil prices, which gained back more than $1 per barrel to climb above the $44 mark. Yet the stock has still lost about a third of its value since late June, reflecting the latest wave downward in the energy markets. To succeed in a tough environment, Denbury will need to keep moving forward with its efforts to reduce costs, which in its most recent quarter helped send overhead expenses down by more than two-fifths and lease operating expenses down by almost 25%. Ideally, Denbury would prefer oil prices to rise, but its operational successes also show a path forward for the company.