Stock market jumps after strong jobs report
NEW YORK — Good news was finally good news for the stock market Friday.
Stocks rose sharply after the government reported a fourth straight month of solid U.S. job gains, the latest encouraging sign for the economy.
The strengthening job market focused investors on the nation’s improving economy instead of concerns about the Federal Reserve’s stimulus, snapping a five-day losing streak for stocks.
Stocks had been falling this week after a string of positive economic reports made investors worry that the Fed would soon pull back on its $ 85 billion in monthly bond purchases, which have kept long-term interest rates low and supported the stock market.
Now that hiring is showing consistent strength, investors seem to be letting go of their worry that the economy isn’t ready for the Fed to start weaning the U.S. off that stimulus.
“The jobs report was outstanding,” said Randy Frederick, a director of trading and derivatives at Charles Schwab. “It’s refreshing to see the markets react positively, because we’ve been in a mode for so long of ‘good news is bad news.’”
Employers added 203,000 jobs last month after adding 200,000 in October, the Labor Department announced before the U.S. stock market opened on Friday. November’s job gain helped lower the unemployment rate to 7 percent from 7.3 percent in October.
Stocks jumped at the open and moved higher throughout the day. The Dow Jones industrial average rose by as much as 200 points in early afternoon trading before easing back slightly before the close.
The Dow closed up 198.69 points, or 1.3 percent, to 16,020.20. The Standard & Poor’s 500 index rose 20.06 points, or 1.1 percent, to 1,805.09, its biggest gain in a month. The Nasdaq composite climbed 29.36, or 0.7 percent, to 4,062.52.
All 10 sectors in the S&P 500 index rose. Industrial stocks and others that tend to rise the most when the economy is growing posted some of the biggest gains. The jobs report showed that manufacturers added 27,000 jobs, the most since March 2012.
General Electric rose 49 cents, or 2 percent, to $ 26.94. Plane maker Boeing increased $2.45, or 2 percent, to $135.18.
“Now we’re getting investors trading more on fundamentals and long-term earnings for next year,” said Mike Serio, regional Chief Investment Officer for Wells Fargo Private Bank. “There may be some backbone to the economy.”
Friday’s jobs news follows other upbeat signals this week on housing, manufacturing and economic growth.
Signs that the recovery is becoming more entrenched may lure more buyers back into the stock market, supporting prices, said JJ Kinahan, chief derivatives strategist at TD Ameritrade. Despite steady gains for the market over the last five years, some investors have remained wary after the collapse of 2008.
“We’re seeing good numbers,” Kinahan said. “Does this encourage people who have been underinvested all year to come in and spend some money on the market?”
Friday’s gains ended a minislump for the market in December. Fears of the Fed pulling back on its stimulus had made traders nervous when they saw the slew of good economic reports.
The good-news-is-bad-news attitude has at times stalled the market’s impressive run-up this year.