Dow’s close best since May 2008
NEW YORK – A drop in the unemployment rate to its lowest level in three years propelled the Dow Jones industrial average Friday to its highest close since May 2008, before the financial meltdown later that year. The Nasdaq composite index hit an 11-year high.
The Dow jumped 156.82 points to 12,862.23, its highest mark since May 19, 2008, about four months before Lehman Brothers investment bank collapsed. In May 2008, credit markets were tightening up, subprime mortgages were going sour and Bear Stearns had already collapsed.
Before the market opened, the Labor Department said the economy added 243,000 jobs in January. It was the strongest job growth in nine months. The increase in hiring pushed the unemployment rate down to 8.3 percent, the lowest since February 2009.
The surprising data gave financial markets a morning jolt that lasted throughout the trading day. The Nasdaq index closed at 2,905.66, its highest since December 2000, during the steep decline that followed the dot-com stock bubble.
The price of ultra-safe Treasury notes dropped, sending yields higher, and the price of oil rose for the first time in a week.
“In this economy, only one variable matters right now, and that variable is employment,” said Lawrence Creatura, an equity portfolio manager at Federated Investors. “This report was great news. It was beyond all expectations, literally. The number was higher than even the highest forecast.”
The Standard & Poor’s 500 index added 19.36 points, or 1.3 percent, to 1,344.90, its highest close since last July.
Treasury prices fell, lifting the yield on the 10-year note Treasury to 1.93 percent. When bond prices fall, yields rise. The benchmark 10-year rate had traded below 1.79 percent earlier this week as traders bought U.S. Treasurys on renewed concern over Europe’s ongoing debt crisis.
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