Stock Market Today: What’s Behind the Gains

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The Dow Jones Industrial Average set another fresh high when the stock market today (Friday) opened up, thanks to a stronger-than-expected jobs report.

Right out of the gate, the Dow was up 80.93 points, or 0.56%, at 14,410.42. The Standard & Poor's 500 Index was up 7.36, or 0.48%, at 1,551.62, logging its sixth consecutive day of gains. The Nasdaq was up 15.21 points, or .47%, at 3,247.30.

Stocks have been on a tear since Tuesday when the Dow surpassed its all-time high of 14,164.53 hit on Oct. 9, 2007. The benchmark is up roughly 9% year-to-date. The S&P, a broader measure of the overall markets, is in reach of its record 1,565 close hit in 2007.

Investors continue to pile into equities on the new highs – especially as more companies announce increases in dividends and stock buybacks.

According to S&P Dow Jones Indices, companies in the S&P 500 Index are expected to pay at least $300 billion in dividends this year, topping the $282 billion paid-out last year. In addition, U.S. companies in February announced plans to buy back $117.8 billion of their own shares, the highest monthly total on record since 1985, according to Connecticut-based research firm Birinyi Associates.

By noon, stocks gave back some gains as market enthusiasm waned, but all three indexes remained in positive territory.

Stock Market Today Moves on Jobs Report

Fueling the early rally was the Labor Department's jobs report which showed the U.S. economy added 236,000 jobs in February. That handily beat expectations of between 160,000-170,000 new hires.

The robust read helped nudge down the unemployment rate to 7.7% from 7.9%, its lowest level since December 2008.

But the unemployment picture remains gloomy. Some 12 million people are still out of work. The rate dipped not just because more people found work, but also because 130,000 discouraged workers dropped out of the workforce.

While employers have been increasing headcount since the financial crisis, the number of jobs added is progressing at a sluggish rate, nowhere fast enough to return the labor market to where it was before the Great Recession.

The U.S. economy lost 8.8 million jobs in the wake of the financial meltdown and has only recouped 5.6 million. Moreover, the population has grown, and more people are entering (or attempting to enter) the workforce.

Banks Pass Stress Test

Select banks also boosted markets.

A bevy of the nation's biggest banks got a passing grade from the Federal Reserve's stress tests. Released late Thursday, the results revealed the majority of large banks are now in a position to survive a serious recession and a stock market crash.

The tests, implemented following the financial collapse of 2008, measure a bank's capital levels during unfavorable conditions. A "pass" paves the way for healthy banks to start rewarding shareholders with increased dividends and share buybacks.

But some critics maintain the stress tests were too easy. The results, they say, simply vindicate the government who pushed for financial systems to shore up assets.

"The stress tests were just not very stressful," Rebel A. Cole, professor of finance at DePaul University told the New York Times.

At the top of the class among big banks was Citigroup Inc. (NYSE: C). The NYC-based bank celebrated by announcing plans to buy back a Fed-approved $1.2 billion in stock through Q1 of 2014. Shares rose nearly 2% Friday, hitting a 52-week high of $46.20 intraday.

Bank of New York Mellon Corp. (NYSE: BK), up 2.21%, and State Street Corp (NYSE: STT), up 1%, were also standouts.

In the middle was Bank of America Corp. (NYSE: BAC), down 1% and Wells Fargo & Co. (NYSE: WFC), up 0.1%. Both produced rosier results than the Fed expected.

However, Morgan Stanley (NYSE: MS), down 1.81%, JPMorgan Chase & Co. (NYSE: JPM) down 1.5%, and Goldman Sachs Group Inc. (NYSE: GS), down 2.3%, didn't get high marks. The trio produced some of the lowest capital results among Wall Street colleagues.

Failing the test was Ally Financial (NYSE: GMA), down 0.3%. Ally is the former finance arm of General Motors Co. (NYSE: GM) and is majority owned by taxpayers. It was the lone letdown of the 18 banks tested.

The Detroit-based bank's Tier-1 common capital ratio, which compares quality capital to risk weighted assets, fell to 1.5%. The Fed's threshold for the stress tests is 5%.

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