Jobs growth surges US stocks

Date:

nyse-friday_1007585cAn unexpected surge in United States jobs growth during October drove US stocks higher and in turn boosted the dollar and interest rates by raising expectations that the Federal Reserve could scale back its economic stimulus as soon as December.

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Reuters reported that the Labour Department said employers added 204,000 new jobs, well above forecasts of 125,000, even though the unemployment rate rose to 7.3 per cent.

“The first part of the equation for the Fed to taper is data showing the economy is getting better. If companies are doing well and business is good, you don’t need to have zero per cent short-term money in order for the stock market to do well,” said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

The department said there was no “discernible” impact on payrolls from the 16-day federal government shutdown last month.

The jobs data and a separate report showing personal income grew 0.5 per cent in September should please retailers as it boosts the sales outlook for the holiday season, said Russell Price, senior economist at Ameriprise Financial Services Inc in Troy, Michigan.

Most economists expected businesses to have been more cautious during the shutdown, he said, adding, “Clearly, what transpired was that businesses viewed the shutdown as a temporary phenomenon and that the economy was still growing and would continue to grow, going forward.”

The Dow Jones industrial average was up 90.83 points, or 0.58 per cent, at 15,684.81. The Standard & Poor’s 500 Index was up 15.72 points, or 0.90 per cent, at 1,762.87. The Nasdaq Composite Index was up 53.41 points, or 1.38 per cent, at 3,910.74.

US Treasury prices fell on the prospect of Fed tapering, while German Bunds hit two-week lows on after the surprisingly strong US jobs gains.

The benchmark 10-year US Treasury note was down 37/32 in price to yield 2.7477 per cent.

The rally on Wall Street helped a measure of global equity markets rebound. MSCI’s all-country world index rose 0.08 per cent.

European shares edged lower, with France underperforming after a rating downgrade by Standard & Poor’s, which cut the French sovereign rating by one notch.

Babatunde Akinsola
Babatunde Akinsolahttps://naija247news.com
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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