U.S stocks increased rapidly on Friday, as the Dow industrials posted its largest one-day point increase in over 3 months.
These solid gains helped the Dow and S&P 500 indices end a turbulent week with slight gains.
Nonfarm payrolls data (NFP) lifted investor sentiment which indicated that the employment growth rate was healthy enough to assume that the economy may be on good footing, however, not healthy enough so as to speed up the Federal Reserve’s first rate hike.
Last month, the U.S. economy managed to add 223,000 jobs, while dropping the unemployment rate to 5.4% which was more-or-less in line with expectations.
Scott Wren, who is Wells Fargo Investment Institute senior global equity strategist, said that the jobs numbers were good but not great. Despite this, Wren said that the numbers were exactly what were needed by the market to head higher. He also added that the healthy jobs number indicated that the economy is doing okay; however, it is unlikely to sway the Fed too much.
The strong employment report managed to put all the major indices on course to end the week a slight bit higher after a turbulent week of trading.
The S&P 500 index (SPX) ended 28.09 points, or 1.4%, higher at 2,116.09 and increased 0.4% for the week. On Friday, all of the ten main sectors closed higher. The Dow Jones Industrial Average (DJIA) leaped 267.05 points, or 1.5% to end the week up 0.9% at 18, 191.11. The Nasdaq Composite (COMP) finished the week roughly where it began at 5, 003.55 which indicated a 58 points increase, or 1.2% higher.
Wren further added that although the unemployment rate is 5.4%, there are too many people who are still part-time or marginally attached, which is the reason why wages are not increasing.
Randy Frederick, who is the Managing Director of Trading and Derivatives at the Schwab Center for Financial Research, said that the market was expecting much poorer jobs numbers on Friday and the strong gains in the employment rates gave rise to a relief rally.
The jobs numbers for April indicate a positive rise in employment numbers after an 85,000 increase in March. The jobs increase and the bigger numbers entering into the labor force assisted with increasing the unemployment rate from 5.5% to 5.4% making it the lowest levels since May 2008, according to the Labor Department on Friday.
MT4 Chart: S&P 500
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