• Sun
  • Nov 23, 2014
  • Updated: 8:59am

US stocks jump on strong jobs report, unemployment falls

PUBLISHED : Friday, 08 March, 2013, 11:44pm
UPDATED : Friday, 08 March, 2013, 11:47pm
 

US stocks moved higher on Friday after a surprisingly strong jobs report suggested the economic recovery was on track.

The widely-anticipated monthly jobs report said the unemployment rate fell to 7.7 per cent from 7.9 per cent, while the number of net jobs gained came in at 236,000, according to the Labor Department.

Both numbers were better than expected.

About 30 minutes into trade, the Dow Jones Industrial average was up 27.38 (0.19 per cent) to 14,356.87, after surging to a new intra-day record of 14,413.17 minutes after the market opened.

The broad-based S&P 500 added 2.09 (0.14 per cent) to 1,546.35. The index was about 19 points below its all-time closing high.

The tech-rich Nasdaq Composite Index increased by 14.34 (0.44 per cent) to 3,236.70.

Analysts hailed the strong jobs report.

“American companies are hiring again in greater numbers,” said Sal Guatieri, senior economist of BMO Capital Markets said in a note.

“Employment should strengthen further as the fiscal fog clears and companies see sustained strength in consumer spending and housing activity.”

Employment should strengthen further as the fiscal fog clears and companies see sustained strength in consumer spending and housing activity

Speculation immediately turned to whether the Federal Reserve would scale back its aggressive bond-purchasing programme in light of the stronger results.

Nomura economist Aichi Amemiya said the erratic trend on jobs growth suggested the pace of job creation “was not stable,” suggesting there is “a long way to go” before the Fed shifts gears.

Dow member McDonalds gained 1.9 per cent after reporting comparable store sales decreased 1.5 per cent in February. However, the results were negatively impacted by the comparison to the February last year period, which included a leap year day.

Citigroup was 1.5 per cent higher after passing the Federal Reserve’s annual stress test -- and exam it flunked a year ago – and announcing a stock buyback.

But JP Morgan Chase was off 1.8 per cent and Goldman Sachs lost 2.7per cent as their results came in on the weak side of the 17 banks which passed.

Gardner Denver, which manufactures industrial machinery, gained 1.2 per cent after investment firm KKR announced it was acquiring the company for around US$3.9 billion, including debt.

Online music company Pandora Media jumped 24.3 per cent after reporting record revenues. The company also announced its chief executive was stepping down.

Bond prices fell. The yield on the 10-year Treasury rose to 2.06 per cent from 1.99 per cent late Thursday, while the yield on the 30-year jumped to 3.25 per cent from 3.20 per cent. Bond prices and yields move inversely.

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