Options Trading News

March 7, 2014  Fri 7:42 AM CT

Stocks are advancing again after the non-farm payrolls report beat expectations this morning.

S&P 500 futures are up more than 0.5 percent at the time of this writing, while most European markets are fractionally lower. India rallied almost 2 percent overnight, continuing its recent run, and Tokyo added almost 1 percent on the heels of bullish option activity in the iShares MSCI Japan exchange-traded fund yesterday.

The S&P 500 pushed above 1880 for the first time ever yesterday before pulling back slightly to end at a new record closing high of 1877. The backdrop remains positive for equities, with evidence mounting of a better economy and monetary conditions remaining supportive. Yesterday, for instance, weekly jobless claims were lower than expected and European central bankers left interest rates near long-term lows. Global manufacturing data was also strong earlier this week.

The Labor Department's monthly employment report released a few minutes ago showed the addition of 175,000 jobs in February, higher than the 163,000 estimated by economists. The overall unemployment rate rose slightly to 6.7 percent from 6.6 percent. (The two sets of figures are based on different surveys.)

Many analysts had anticipated a lower payrolls number because of this season's severe weather. The Institute for Supply Management's last manufacturing report also reflected desire by companies to hire and a belief that inventories are too low--both of which point toward potential growth in the spring.

After today's job data, the calendar is now quiet until Thursday of next week. Despite positive conditions in the market and economy, ongoing tensions with Russia over Crimea could rattle investors. Russian President Vladimir Putin is rebuffing calls from Washington to exit Ukraine, and European leaders have taken steps to deepen ties with Kiev's anti-Russian interim government. So far, the situation has shown no signs of easing.

Our researchLAB market-analysis tool shows bullish sentiment increasing in the last week, with risk-sensitive transports and small caps leading the market higher. Financials are rousing from a three-month slumber and materials have continued their recent leadership. Utilities are the only major sector to fall in the last week. Chinese Internet companies, ocean shipping stocks, solar energy, emerging markets and fertilizers have also been strong.

In company-specific news, Safeway agreed to be purchased by private-equity firm Cerberus Capital in a deal worth as much as $40 a share. SWY, which had been rallying in anticipation of a deal, pulled back slightly in early trading. GT Advanced Technology rose 6 percent following an upgrade by Credit Suisse. Skullcandy is also rallying 24 percent on a strong quarterly report. Big Lots surged 14 percent after beating estimates and announcing plans to sell its Canadian operations.

Currencies are painting a bullish picture again, with the euro and Australian dollar higher and the Japanese yen mostly lower. Commodities are mixed: Oil is up slightly, gold and silver are posting small losses, and copper is down 2 percent.
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