Investors had a hard time finding much optimism around the stock market today. The S&P 500 (^GSPC 0.02%) took a big hit after Wall Street had time to digest this morning's March jobs report, and the index suffered a precipitous 1.25% fall during the course of the day. It seemed like stocks across every industry took a blow on the day, although a few top risers managed to avoid the jobs report fallout.
Why was the Labor Department's jobs announcement reason for pessimism? Total nonfarm payrolls showed a 192,000-job gain for the month, just below average economist predictions of a 200,000-job gain, but still a strong showing after the end of the harsh winter. Better still for the economy, the Labor Department hiked its picture of jobs added in January and February, revising the number of positions added in those two months higher by 37,000. While unemployment remained stable at 6.7%, the labor force participation number jumped to a six-month high.
So why the long faces around Wall Street? Many had expected a boom in jobs that surpassed the projections, showing the American economy on a more robust track in the aftermath of the winter. With predictions for economic growth high in 2014 -- economists forecast around 3% GDP growth on average for the U.S. this year -- today's disappointment casts a pallor over just how fast the economy's moving along. The slow pace of growth means that the Fed is unlikely to hike interest rates soon, so investors should keep an eye on how the economy fared in the first quarter when the early year's GDP picture is released.
While that slowed down most stocks across the industry today, a few notable risers managed to post strong showings. IT distributor Synnex (SNX 1.12%) posted today's leading gain, jumping more than 23.2%, while energy services firm Emerge Energy (NYSE: EMES) climbed more than 11.9%. Of the large caps, Mylan (MYL) capped off the week in a big way by gaining 1.5%.
Let's start off with Synnex. This IT stock has boomed lately, absolutely shredding the S&P's gains during the past year; but it received an even bigger bounce today after its earnings report.
Synnex's technology division revenue jumped by 20%, while earnings climbed 15% for the first quarter. The company's acquisition of IBM's customer care unit made a big impact, as the company managed growth across all its businesses. Yet, Synnex's biggest impact from its report came in its future outlook: Company CEO Kevin Murai sees the increased IT demand that drove this quarter's bounce continuing in the second quarter, giving investors hope that Synnex's stock can keep up its run. With a future price-to-earnings ratio of less than 14, the stock doesn't look considerably pricey just yet despite its gains -- and investors who have reaped the windfall of Synnex's bounce may best be set sticking around and seeing if that demand can come through again in the second quarter.
Emerge Energy also posted a big day on the markets, gaining after Robert W. Baird analysts hiked the stock's rating from neutral to outperform. Emerge's management is boosting the company's production capability substantially, an element that influenced Baird analysts in their decision today based on the firm's ability to drive distribution higher. Emerge only went public last May, but already the master limited partnership has managed to drive its stock drastically higher -- and it maintains a dividend any income investor would salivate over with a 6.9% yield. While the stock's run-up warrants caution, investors who got in early with Emerge certainly haven't had much to worry about so far. With a stock so young, however, investors should keep an eye on whether or not Emerge can sustain its high dividend.
Mylan capped off today's run of gainers as the generic drug stock jumped despite the news that Swedish drug manufacturer Meda warded off the company's takeover attempts. Mylan had been looking to capitalize on synergies with an acquisition of Meda. It's been trying to keep up with hard-charging rivals in the generic drug space, one marked by a number of acquisitions among the biggest players as of late. A purchase of Meda would have provided Mylan with an increased presence in emerging markets and in Europe. Even though the company failed in its bid to takeover Meda, however, investors shouldn't expect Mylan to sit still. The firm's dead-set on a significant buy in the near term to keep pace with its competitors; expect Mylan to find another buyout candidate sometime soon.
