U.S. Indexes Surge 1%, January Jobless Rate Decline to 8.3%

Devan Biswas
03 Feb, 2012
New York City

U.S. stocks surged after jobless rate fell in January to 8.3% and non-farm payrolls increased 243,000. The monthly unemployment rate fell for the fifth month in a row. Estee Lauder dropped 4% after it estimated lower than expected earnings.

[R]11:15 AM New York – U.S. stocks surged after jobless rate fell in January to 8.3% and non-farm payrolls increased 243,000. The monthly unemployment rate fell for the fifth month in a row. Estee Lauder dropped 4% after it estimated lower than expected earnings.[/R]

Stocks in New York traded higher after jobless rate dropped to a 3-year low and non-farm payrolls jumped 243,000 in January. The steady pace of economic reports have lifted the indexes more than 25% since October and lifted more than 6% so far in the year.

The strong job report was the latest among a string of positive economic reports that indicated economy is on the mend outside the housing market.

Separately, the service sector report indicated that the growth accelerated in January at the fastest pace in a year as businesses expand.

The S&P 500 index and the Nasdaq are set to show a gain for the fifth week in a row. For the week, the S&P 500 index is up 1.6% and the Nasdaq is ahead 2.5%.

The Labor Department said based on the survey of households, unemployment rate declined to 8.3% in January, the best gain since February 2009. The number of unemployed fell to 12.76 million according to the latest data.

The December job gains were revised higher to 203,000 from 200,000 on the higher gains in the private sector when unemployment rate was 8.5%. Jobless rate has declined every month since August when the rate peaked at 9.1%.

In January, private sector employers added 257,000 jobs and number of people working part-time but are looking for full-time was still high at 8.2 million. The unemployment rate including underemployed or people who have stopped looking for work hovered at 15.1%.

With the latest data, total payrolls across the nation is still 5.6 million less than at the start of the recession in 2007 and nearly 43% of the 12.8 million people are looking for work longer than six months.

Stock Movers

Cigna Corporation ((CI)) fell 38 cents to $43.75 after the insurance company reported flat fourth quarter revenue of $5.46 billion from $5.43 billion in the same quarter last year.

Net income in the quarter decreased to $290 million or $1.04 per diluted share compared to $461 million or $1.69 per diluted share in the year ago earlier.

The Estee Lauder Companies Inc. ((EL)) slipped 6.4% or $3.81 to $55.04 after the cosmetic maker reported second quarter net sales increased 10% to $2.74 billion from $2.49 billion in the same quarter last year.

Net earnings in the quarter increased 15% to $396.7 million or $1.00 per diluted share compared to $343.9 million or $0.86 per diluted share in the year ago quarter.

The stock sold off after the company offered fiscal third quarter and full-year outlook that was sharply lower than expected. The cosmetic maker estimated adjusted third quarter earnings between 28 cents and 31 cents a share and estimated full year outlook between $2.16 and $2.23 a share, below the consensus view of $2.26 a share.

The Clorox Company ((CLX)) gained 2.3% or $1.60 to $70.33 after the consumer and institutional products maker reported second quarter sales grew 4% to $1.22 billion from $1.18 billion in the same quarter last year.

Net earnings in the quarter surged to $105 million or 79 cents per diluted share compared to $21 million or 15 cents per diluted share in the year ago earlier.