MarketView for April 4

Summary

Momentum shares like Netflix and TripAdvisor sold off sharply for a second straight day on Friday, with the result that the Nasdaq chalked up its worst day since February. The large drop in momentum stocks overshadowed the day's relatively strong March jobs data, which helped the Dow and S&P 500 hit intraday record highs early in the session.

Nasdaq's 2.6 percent loss follows a nearly 1 percent slide on Thursday and puts the index more than 5 percent below its closing high for the year, which was set on March 5.

The day's action in momentum names - typically high-growth companies mostly in the tech and biotech sectors that led 2013's rally - extends their recent selloff, which investors mostly have been at a loss to explain.

The S&P 500's largest percentage decliners included some Nasdaq names: E*Trade Financial fell 7.8 percent to $20.43; Netflix was down 4.9 percent to $337.31, and TripAdvisor was down 6.1 percent to close at $85.69.

Price-to-earnings ratios for the momentum names typically are much higher than average. For instance, TripAdvisor's P/E is 42.5 and Netflix's is 87.8, while the P/E for the S&P 500 is 15.4.

For the week, the Dow was up 0.6 percent and the S&P 500 was up 0.4 percent, while the Nasdaq fell 0.7 percent.

Momentum names appeared to stabilize earlier this week before resuming their decline on Thursday.

Two weeks ago, Gilead fell after Congress asked the company to explain the $84,000 price tag of its new hepatitis C drug Sovaldi, and that decline set off a wave of losses in other biotech and momentum names.

The Nasdaq biotech index fell 4.1 percent to 2,356.60. The index is down about 18 percent from its lifetime high reached in February. For the day, Biogen Idec was down 4.5 percent to end at $288.27, while Gilead Sciences closed down 2.4 percent at $72.20.

Earlier in the day, the S&P 500 touched a lifetime high of 1,897.28, the third time this week that the index set an intraday record, while the Dow Jones Industrial Average hit an intraday record high of 16,631.

The government's nonfarm payrolls report showed a solid pace of hiring for a second month, suggesting the economy appears to be recovering from a winter slowdown.

Employers added 192,000 jobs in March, just shy of the 200,000 forecast, after hiring 197,000 in February. The unemployment rate was unchanged at 6.7 percent, according to the report.

Shares of Halozyme Therapeutics fell 27.3 percent to close at $8.43 after the company said it was temporarily halting enrollment of patients and dosing of its cancer drug in a mid-stage trial on patients with pancreatic cancer, after the recommendation of an independent safety committee.

Approximately 7.6 billion shares changed hands on major equity exchanges, well above the 6.3 billion average numbers of shares traded so far this month, according to data from BATS Global Markets.

Job Growth Continues Unabated

The Labor Department reported on Friday morning that employers continued to hire unabated for a second straight month during March, further evidence the economy was shifting into higher gear after being held back by a brutally cold winter.

Nonfarm payrolls increased by 192,000 new jobs last month after rising 197,000 in February, the Labor Department said on Friday. The unemployment rate was unchanged at 6.7 percent, as Americans flooded the labor market.

The payrolls count for January and February was revised to show 37,000 more job created during those months than previously reported. A Labor Department official said harsh weather had a slight impact on hours worked last month.

The labor force participation rate or the proportion of working-age Americans who have a job or are looking for one rose to a six-month high of 63.2 percent from 63 percent in February.

An unusually cold and snowy winter slammed the economy at the end of 2013 and the beginning of this year. Growth was further undercut by efforts by businesses to trim bloated inventories, the expiration of benefits for the long-term unemployed and cuts to food stamps.

However, data ranging from manufacturing and services sector activity to automobile sales have signaled strength in the economy as the first quarter ended.

The steady pace of job gains should allow the Federal Reserve to continue scaling back its monetary stimulus and keep overnight interest rates near zero for a while. Fed Chair Janet Yellen has argued the central bank needs to maintain a highly accommodative monetary policy for some time to eliminate slack in the labor market.

The private sector accounted for all the employment gains in March, with the government adding no jobs. The private sector has now recouped all the jobs lost during the recent recession.

Manufacturing payrolls fell 1,000, breaking seven months of gains. Factory job growth has been slowing since surging in November. But with auto sales accelerating sharply in March, hiring could rebound in the months ahead.

The construction industry accounted for an increase of 19,000 jobs, making it the third consecutive month of job gains for that sector. The increase occurred despite the housing market struggling to climb out of a soft patch.

Average hourly earnings dipped by a cent in March, while the length of the workweek increased to 34.5 hours from an average of 34.2 hours in February - another positive  sign for continued economic growth.