Weekly Recap

Here is the Weekly Wrap from Briefing.com:

Stocks surged after strength overseas and better-than-expected economic data helped the major indices overcome losses from early in the week. The week ended on a positive note following a better-than-expected U.S. employment report.

The S&P 500 rallied 5.3% as all ten sectors posted a gain. Financials (5.7%), consumer discretionary (5.0%) and materials (4.2%) led the way. Defensive sectors underperformed on a relative basis, with utilities gaining 1.6%.

Overseas strength and better-than-expected economic data acted as the main drivers behind the buying interest.

The much anticipated August employment report marked the most important event of the week. With many economists predicting a poor number, the market received an upside surprise following news that August nonfarm payrolls fell 54,000, much better than the Briefing.com consensus of that called for a decline of 120,000. The September reading was revised to a decline of 54,000, an improvement over the original decline of 131,000.

Private nonfarm payrolls rose 67,000, which was better than the 44,000 consensus. Private payrolls have increased each month since January. The unemployment rate rose to 9.6% from 9.5%, as expected.

The labor market is continuing to struggle, though recent employment reports suggest there is a very low probability of a double-dip recession.

In other economic data, the August Consumer Confidence reading encouraged some buying interest in stocks after confidence climbed to 53.5 from 51.0 (Briefing.com consensus 51.0).The market reacted positively to news that the August ISM Index rose to 56.3 from 55.5, well ahead of the Briefing.com consensus that called for a decline to 52.9. Later in the week the ISM Services report came in below estimates, but the market managed to shrug off the negative news.

The housing market got a glimmer of positive news after the July pending home sales index increased 5.2% m/m, which was well above the Briefing.com consensus that called for an unchanged reading.

Although we are in the slow period for earnings reports, there was plenty of corporate action on the M&A front. Intel (INTC) announced plans to acquire the wireless unit of Infineon Technologies for $1.4 bln in cash. Sanofi-Aventis (SNY) offered $18.5 bln in cash to acquire Genzyme (GENZ). Genzyme rejected the offer.3M (MMM) is acquiring Cogent (COGT) for $430 mln, or $10.50 for per share. Separately, 3M is going to pay $230 million to acquire Israel-based Attenti Holdings.

In other corporate news, Monsanto (MON) came under pressure after the company issued a downside FY2010 EPS forecast of between $2.40 and $2.45 compared to the $2.49 consensus. Shares of Monsanto fell 1.4% for the week.

Meanwhile, retailers benefited from better-than-expected August same store reports from the likes of Abercrombie (ANF), Costco (COST) and Macy's (M), among others.As stocks rallied, Treasury yields spiked higher. The 10-year note yield rebounded to end the week at 2.70%, a 28 basis point rebound from its intraweek low of 2.45%.

Commodities prices gained, with the CRB Index up 2.1%.