August 4, 2012 in Business

Jobs report sends stocks soaring

Pallavi Gogoi Associated Press
 

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 U.S. 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 U.S. economy may be doing better on its own. U.S. 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 U.S. service companies grew slightly faster 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.

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