Despite a disappointing jobs report, the Dow Jones Industrial Average (^DJI 0.13%) gained over the course of the session after to finish up 30 points, or 0.2%. The Department of Labor reported just 162,000 jobs were added in July, short of economists' prediction of 175,000, while private sector job growth, which has been stronger than overall growth due to cuts in the public sector, was just 161,000, or 34,000 below estimates. Still, the unemployment rate dropped to a four-year low of 7.4%, but that was due to a decline in the size of the workforce and the number of people looking for jobs, rather than a meaningful addition of new jobs.
Ironically, the main reason for the Dow's gain today seemed to be the market's reaction to the negative jobs report. Benchmark treasury yields fell 4.4%, indicating that investors are more confident that the Fed will delay its plan to taper its bond-buying program. In fact, several major banks changed their projection for the start of the taper from September to December. It seems to be a heads-I-win, tails-you-lose world for investors these days, as the markets reacted warmly to both good and bad economic news. Investors interpret good news straightforwardly, while bad news means the Fed will keep pouring money into the economy and keeping interest rates down. Both the Dow and S&P 500 finished at all-time highs today.
Hewlett-Packard (HPQ +2.88%) was the big winner on the Dow this Firday, finishing 2.9% higher. The PC maker may have benefited from rival Dell jumping 5.6%, as CEO and Founder Michael Dell sweetened his buyout offer by adding a one-time dividend to his proposed offer price of $13.75 a share. Mr. Dell has been fighting activist investor Carl Icahn to take the company private in recent months. Today's jump is a reminder that investors still see value in the PC market, which could stoke demand for an HP buyout, or a higher price for its assets. The stock also appeared to jump on rumors, later claimed to be untrue, that Icahn had taken a stake in HP. At one point today, the PC maker was up over 5%.
A day after being one of the Dow's few losers in yesterday's rally as interest rates jumped, Home Depot (HD 2.36%) moved up 2% today as rates fell. As its business is heavily dependent on the housing market, rising mortgage rates are a bane for the home-improvement retailer, as they could cool off the real estate recovery. Thanks to the strong housing market, Home Depot shares are up more than 30% this year.
Finally, Chevron (CVX +0.69%) fell 1.2% after its earnings report, like Exxon's yesterday, failed to impress. Lower oil prices were the culprit, again, as profits at the energy giant declined 26% from a year ago, to $5.37 billion, or $2.77 a share. That missed the analyst consensus at $2.97. Revenue also dropped 8%, to $57.37 billion, but that topped estimates of $56.01 billion. Repair and maintenance work on refineries was also listed as a cause for the smaller profits, but oil and gas production was down 1.6%, an industrywide trend for the majors. Still, with oil prices back up over $100, Chevron should have a better quarter next time around.
