Stocks soar on strong July job reportComment on this story
New York - A surge in hiring last month got a big welcome on Wall Street on Friday.
The Dow Jones industrial average surged 217.29 points to close at 13,096.17, ending a four-day losing streak. It was the best day for the Dow since June 29.
Markets had been slumping all week after central banks in the US and Europe took no new action to shore up the economy, as investors had hoped.
The Labor Department's closely watched monthly jobs report gave investors assurance that the US economy may be doing better on its own. US employers added 163,000 jobs last month, far more than the 100,000 economists were expecting. From April through June, the economy added an average of just 73,000 jobs a month, compared with an average of 226,000 in the first three months of the year.
“It's one step forward,” said Joe Bell, senior equity analyst at Schaeffer's Investment Research. “But we would like to see continued improvement in the labor market in coming months.”
There was more to cheer about from the service sector, which employs 90 percent of all Americans.
The Institute for Supply Management reported that US service companies grew at a slightly faster pace in July. The ISM's services index rose to 52.6 from 52.1 in June, which was the lowest reading since January 2010. Any reading above 50 means that business is growing for service providers.
The good economic news caused investors to sell low-risk assets like U.S. government debt. The selling drove prices down and yields up. The benchmark 10-year Treasury note was yielding 1.57 percent, up from 1.48 percent Thursday.
Oil prices also rose as investors became more optimistic about the economy. Benchmark crude shot up $4.27 to $91.40 on the New York Mercantile Exchange.
The broader Standard & Poor's 500 index rose 25.99 points to 1,390.99, and the Nasdaq composite index added 58.13 points to 2,967.90.
Despite the gain in hiring, there were still enough signs of weakness in the latest jobs report to keep hope alive that the Federal Reserve may still take more steps to kick-start the economy at its next meeting in September. A separate survey of households by the Labor Department found that the unemployment rate rose to 8.3 percent in July from 8.2 percent in June.
“I'm not ready to declare victory just yet,” said Uri Landesman, president of hedge fund Platinum Partners. “Lending activity is still pretty low because banks aren't taking that much risk, and it's hard for an economy to expand when banks are on tenterhooks themselves.”
At the end of a two-day policy meeting on Wednesday, the Fed said it would take action on the economy “as needed to promote a stronger economic recovery.” On Thursday, markets fell sharply after the European Central Bank didn't announce specific plans to tackle the continent's debt crisis, as many investors expected it would.
Several US companies turned in strong earnings reports on Friday. Procter & Gamble, which makes Tide, Bounty, NyQuil and many other consumer products, reported a 45 percent surge in quarterly earnings, easily beating Wall Street's forecasts. P&G's stock rose $1.99 to $65.50.
Other stocks making big moves included:
- Knight Capital leapt 57 percent after the company obtained an emergency credit line, according to news reports. The trading firm was responsible for stock market disruptions on Wednesday which will cost it $440 million. The stock had fallen 75 percent over the previous two days. On Friday, the stock rose $1.47 to $4.05.
- LinkedIn shot up $15 to $108.51. The social media company reported that its second-quarter revenue increased faster than analysts had expected. LinkedIn also raised its full-year revenue forecast.
- Kraft Foods rose $1.57 to $40.51 after reporting a 5 percent jump in its second-quarter profit. Higher prices helped offset a drag from raw-materials costs and currency exchange rates.
- Zipcar plummeted $3.88 to $6.75. The stock reached an all-time low Friday after the car-sharing network reported lower-than-expected revenue in the second quarter and cut its annual revenue estimates. - Sapa-AP