Afternoon Review

Stocks got off to a slow start after disappointing jobs data, but ultimately finished higher on the strength of the industrial sector. Today marked the fifth straight advance for the S&P 500, which posted a weekly gain of 2.53%.

Today’s labor report showed that payrolls fell by 190,000 in October versus an expected loss of 175,000. The bigger headline in the media, though, was the unemployment rate hitting 10.2%, the highest level since 1983.

General Electric (GE) led industrials after two separate analysts raised their ratings and share-price estimates. Also contributing to gains were transportation stocks, especially the railroads, which are still rising after Warren Buffett’s lofty valuation of Burlington Northern Santa Fe. (More on this topic can be found here.)

Despite all of press industrials received, the materials sector was the best weekly performer, finishing with a 5% gain. Gold stocks led in the sector, advancing nearly 13% this week. Although the Materials sector was strong this week, the CRB Commodity Index recorded a 1.8% loss on the week. This may not surprise you if you read the September 17 post comparing commodity exposure strategies.

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Peter J. Lazaroff, Investment Analyst