US stocks recover losses as report reveals job market boom

asked 2018-06-11 11:58:14 -0500

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US stocks have climbed after a report showed the job market is still revving higher, even with the spectre of a possible trade war hanging over markets around the world.

The better-than-expected news on jobs helped the S&P 500 more than recover all its losses from earlier in the week.

Interest rates and the value of the dollar also rose on expectations that the Federal Reserve got more justification to continue raising interest rates steadily, with its next decision due in about a week and a half.

Beyond the jobs report, stronger-than-expected readings came in on US manufacturing growth and construction spending. They helped turn attention away from the worries about global trade tensions and European politics that had dragged on stocks in recent weeks.

"It's refreshing that some strong economic data today took some focus off the trade rhetoric," said Jon Adams, senior investment strategist at BMO Global Asset Management.

"It's been a banner day for US data overall. You look at the payrolls report, and it's hard to find too much negative in there."

The strong reports raise the likelihood that the Federal Reserve may increase short-term interest rates four times this year, rather than just three.

Higher rates can hurt stock prices, but Mr Adams said investors appear relatively prepared for the possibility "because the Fed is hiking for the right reasons".

The S&P 500 index rose 29.35 points, or 1.1%, to 2,734.62. For the week, it climbed 0.5% after scrambling back from a loss of more than 1% earlier.

The Dow Jones industrial average jumped 219.37, or 0.9% , to 24,635.21, and the Nasdaq composite rose 112.21, or 1.5%, to 7,554.33. The Russell 2000 of small-company stocks rose 14.37, or 0.9%, to 1,647.98.

Twice as many stocks rose as fell on the New York Stock Exchange.

Employers added 223,000 jobs last month, more than economists expected and a pickup from April's hiring rate of 159,000.

Wages for workers also accelerated, with pay up 2.7% from a year ago. That's a bit faster than April's 2.6% wage growth.

Looking forward to seeing the employment numbers at 8:30 this morning.

- Donald J. Trump (@realDonaldTrump) June 1, 2018 President Donald Trump raised eyebrows when he sent out a tweet ahead of the jobs report release that suggested it may be a good one.

Treasury yields and the dollar rose modestly following the tweet, although they had steeper gains after the official release.

As the jobs report typically moves markets, government officials are not supposed to comment on it beforehand.

The encouraging data helped push the yield on the 10-year Treasury note to 2.90% from 2.86% late on Thursday. The two-year yield, whose movements are dictated more by expectations for Fed movement, rose to 2.48% from 2.44%.

A quick beneficiary of higher rates can be the banking ... (more)

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