May 6, 2011 in Business, Nation/World

Stocks rally as job growth surprises Wall Street

Associated Press
 

NEW YORK — The biggest corporate hiring spree in five years is reversing a weeklong slide in the stock market.

The Labor Department reported today that private employers added 268,000 jobs, the most since February 2006. Taking into account job cuts of government workers, the economy added a total of 244,000 jobs overall last month, well above the 185,000 jobs that analysts had predicted. It was the third straight month that featured an increase of more than 200,000 jobs.

The unemployment rate rose, however, to 9.0 percent from 8.8 percent in part because the survey counted more people who resumed looking for work.

Stocks rallied broadly, lifting all 10 company types that make up the S&P 500. The Dow Jones industrial average gained 159 points, or 1.3 percent, to 12,742 in midday trading. The S&P 500 added 17, or 1.3 percent, to 1,352. The Nasdaq composite rose 43, or 1.5 percent, to 2,858.

“Everyone was a bit surprised by the jobs number,” said Frank Fantozzi, the chief executive of Planned Financial Services, a Cleveland, Ohio-based firm. “It’s a good indication for the markets that we are still in the growth stage.”

Industrials companies that benefit from global building and expansion projects led the market following the jobs report. Caterpillar Inc. rose 2.6 percent gain, the most of the 30 companies that make up the Dow average. 3M Co. rose 1.8 percent, and General Electric Co. gained 1.7 percent.

The higher jobs number also helped stem a sell-off in commodities brought on by fears that the economy was sputtering. Regular investors and speculators had begun to flee commodities in an effort to lock in profits in case the economy slowed even further. Oil rose back above $100 a barrel after falling below the mark Thursday for the first time since mid-March.

“The jobs report put an end to the idea that growth appeared to be weakening, which is what really fueled most of the declines in commodities this week,” said Jeffery Kleintop, the chief strategist at LPL Financial.

Financial markets are markedly different than this time last year. Friday marks the one-year anniversary of the “Flash Crash.” Stocks tumbled that day when one large trade overwhelmed the market’s computer servers and sent prices in a tailspin. Though stock prices made up most of their lows, the sudden drop fueled skepticism that stocks were a safe investment. That led many investors to pull money out of the stock market.

Berkshire Hathaway Inc. and Fannie Mae are among the companies reporting quarterly results by the end of the day.

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