Stocks rallied to end the week thanks to a strong jobs report and the surprise announcement that Warren Buffet had purchased shares of Amazon. The Dow gained 197 points to 26,507. Trading volume was lower and for the second week in a row the Dow finished flat but is still up 12.8% for the year.
The labor report for April came out stronger than expected with 263,000 new jobs with the unemployment rate falling to 3.6% which is the lowest reading since 1959. The fall in the unemployment rate was largely due to the labor force participation rate losing ground. Average hourly earnings rose 0.2% and are up 3.2% year over year. Number of hours worked declined 0.1% which was the only fly in the ointment. The overall tenor of the report was indicative of continued economic strength in the US.
US Steel reported better than expected earnings with an 11% revenue jump and an increase in bottom line profits of 47%. Cash flow was positive, and the company said strength in US markets offset weakness in Europe. Within the US markets the auto sector was positive as was energy related product sales like pipes. Industrial and construction markets were good and are expected to continue to improve as the year unfolds. The report surprised the gurus who reacted by sending shares of all steel stocks higher.
The global food supply is taking a hit thanks to an outbreak of African swine flu in China that has now spread to Vietnam, Cambodia and Mongolia. Analyst are now estimating that as many as 200 million porkers will need to be torpedoed and since pork is very popular in China and since China put tariffs on US pork imports the outbreak could cause food inflation in the Sino region. Stay tuned as this unfolds. It puts China in a tough spot regarding a trade deal with the US as the Chinese gubment works to contain the outbreak and stabilize the food supply.