Surprisingly strong US jobs report sends stocks soaring | Reuters - Firstpost
You are here:

Surprisingly strong US jobs report sends stocks soaring | Reuters

  Updated: Jul 8, 2016 15:11 IST

#article   #Entertainment   #Gold   #India   #Taiwan   #United Kingdom  

NEW YORK Wall Street rose on Friday, recovering all the losses sustained after Britain's surprise vote to leave the European Union, and stocks around the globe also jumped after data showed U.S. job growth in June accelerated more rapidly than even the most optimistic forecasts.

The U.S. economy added 287,000 jobs last month, according to the Labor Department, smashing the consensus forecast of 175,000. It was the highest total in eight months, wiping out expectations that the Federal Reserve might cut interest rates in the coming months.

U.S. equity markets advanced on the news, led higher by the financial sector.

The Dow Jones industrial average rose 225.55 points, or 1.26 percent, to 18,121.43, the S&P 500 gained 28.49 points, or 1.36 percent, to 2,126.39 and the Nasdaq Composite added 73.35 points, or 1.5 percent, to 4,950.16.

"What this report does is it assuages fears about the economy losing momentum. That’s been weighing on the minds of investors," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

"In order for the market to keep going higher, there needs to be assurance that the economy is on solid footing and that the most important component of the economy, which is the U.S. consumer, is still gaining."

European stocks also surged after the data's release, with Germany's DAX stock index rising 2.24 percent to lead the region's bourses. Europe's FTSEuroFirst 300 index of top shares rose 1.49 percent.

MSCI's all-country world stock index rose 1 percent.

Oil prices initially rose more than 1 percent after the strong jobs data and on worries about new attacks on Nigerian oil infrastructure.

Brent crude futures were up 0.8 percent, at $46.78 per barrel. U.S. crude futures rose 0.55 percent to $45.39 a barrel.

Still, the upbeat U.S. jobs report failed to significantly alter the longer-term expectation that the Federal Reserve will keep U.S. interest rates on hold for at least a year, according to Fed funds futures prices.

Investors see a zero percent chance the Fed will raise rates at this month's policy meeting on July 27, and less than a 25 percent chance of a rate hike before year-end, according to CME Group's FedWatch tool.

Investors remain worried about the world economy following the Brexit vote and a deepening crisis in Italian banks.

"Even though the Fed’s dual mandate involves full employment and price stability, they’re looking far beyond these two parameters to figure out what they’re going to be doing," said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York.

"They’re much more in risk management mode, much more concerned about developments overseas and it’s not clear how global factors will affect the U.S. economy."

The 10-year U.S. Treasury yield rose 3/32 in price to yield 1.376 percent.

Low expectations for a Fed rate hike also pushed the U.S. dollar down against the yen. While the dollar rose immediately after the jobs report, climbing to a two-week high, those gains evaporated and the dollar was last down 0.2 percent to 100.53 yen.

The first measure of UK consumer confidence since the Brexit referendum two weeks ago showed the joint-steepest decline in morale since 1994, according to research company GfK on Friday.

(Corrects first paragraph to eliminate extraneous word.)

(Reporting by Dion Rabouin; Additional reporting by Jamie McGeever in London; Editing by Bernadette Baum and David Gregorio)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Comment using Disqus

Show Comments