MarketView for March 8

Summary

Stocks advanced on Friday as the Street basically ignored the technical default by Greece and focused instead on another strong monthly jobs report. Nonetheless, trading was choppy near the close after the International Swaps and Derivatives Association said Greece has triggered an insurance payment on credit default contracts.

Investors took the Greek news largely in stride because the event was widely expected. Still, it is a declaration of default following the biggest sovereign debt-restructuring deal in history, and the specter of trouble in other euro-zone countries remains.

Wall Street posted its first major loss of the year earlier this week on fears of a disorderly default in Greece. But the market rebounded on news that the U.S. Federal Reserve is considering a new type of Treasury and mortgage bond-buying. Financials, in particular, got a lift from the Fed news.

For the week, the S&P 500 edged up 0.1 percent. The index has advanced for five of the past six weeks. Exactly three years ago, the S&P 500 posted a 12-year closing low at 676.53 during the height of the financial crisis. The index has more than doubled since then, although it stalled last year before resuming a rally in 2012.

Bank shares, among the most sensitive to growth expectations and the euro-zone crisis, led the gains. Citigroup added 0.6 percent to $34.20, while JPMorgan Chase gained 1.5 percent to close at $41.03.

Employers added 227,000 jobs to their payrolls in February, government data showed, while the unemployment rate held at a three-year low of 8.3 percent even as people flooded back into the labor force to hunt for jobs.

Shares of Monster Worldwide, an online employment agency whose stock is sensitive to changes in the employment outlook, ended the day up 5.8 percent to close at $9.11.

More than 80 percent of the issues in the S&P consumer discretionary sector index were higher, thereby underscoring the assumption that the jobs recovery will boost consumer spending, a pillar of  our domestic economy.

There was continued strength in the home building sector as seen earlier in the week, as the Dow Jones home construction index chalked up a gain of 3.3 percent. Credit Suisse raised its recommendation on three big U.S. home builders, DR Horton, Lennar and Toll Brothers to "outperform" from "neutral."

In the beverage sector, though, Green Mountain Coffee Roasters sank 15.7 percent to $52.59 on fears it may lose its near monopoly in the U.S. single-cup coffee market after Starbucks Corp outlined plans to launch a rival coffee machine. Starbucks ended the day up 2.9 percent to close at $51.84.

Volume was light, with only about 6.2 billion shares changing hands on the three major equity exchanges, a number that was below the daily average of 6.9 billion shares.

Job Growth is Respectable

According to a Labor Department report released Friday morning, the economy chalked up a third straight month of decent job growth in February, keeping unemployment steady. It was not a spectacular report, as there are still 12.8 million people unemployed, up from less than 7 million before the recession began in 2007. And nonfarm payrolls are still down by 5 million jobs from their peak.

Nonetheless, the economy added 227,000 workers to nonfarm payrolls in February, the Bureau of Labor Statistics reported on Friday, while the unemployment rate held steady at 8.3 percent. The gain in payrolls was a little bit more than the 210,000 or so jobs Wall Street economists had expected but a little less than some on the Street had hoped.

The payroll gain was down a bit from the 283,000 jobs added to payrolls in January, but that number was revised higher on Friday, as was December's figure. Together, the revisions added 61,000 more jobs to the past two months' gains. Payrolls have grown by 245,000 jobs, on average, for the past three months.

The factory sector, which has been a relative bright spot in the economy recently, added 31,000 jobs in February, while the retail sector cut more than 7,000 jobs. Temporary help services added 45,000 jobs, possibly a leading indicator of permanent hiring ahead.

There are still plenty of reasons for caution. In addition to the still-high number of unemployed people, the average duration of unemployment is still high, at 40 weeks. And wages continue to lag with average hourly earnings were up just 1.9 percent from a year ago. That is not enough to keep up with inflation. Nonetheless, steady job growth will eventually lead to higher wages as the available labor pool is reduced.

The U-6 measure of unemployment, which counts people marginally attached to the labor force, such as those forced to work part-time, fell to 14.9 percent, the lowest since January 2009.

Meanwhile, the unemployment rate held steady even as the labor force grew in February -- helping address another concern of some skeptics, that unemployment has only been falling because people have given up looking for work, taking them out of the labor force and off of the Labor Department's radar.