Hiring spree surprises Wall Street
The biggest corporate hiring spree in five years has ended a week-long slide in the US stock market.
The US Labor Department reported today that private employers hired 268,000 people last month, the most since February 2006. Taking into account job cuts of government workers, the economy added a total of 244,000 jobs overall last month, well above the 185,000 jobs that analysts had predicted.
It was the third straight month with an increase of more than 200,000 jobs.
The unemployment rate rose, however, to 9.0% from 8.8%.
The news on job growth helped lift the dollar, nudged up oil prices and reversed a four-day slump for stocks.
The Dow Jones industrial average gained 54.57 points, or 0.4%, to close at 12,638.74. The Standard & Poor’s 500 index rose 5.10, or 0.4%, to 1,340.20. The Nasdaq composite rose 12.84, or 0.5%, to 2,827.56.
Industrials companies that benefit from global building and expansion projects led the market following the jobs report. Caterpillar rose nearly 1%. Boeing rose 1.1%.
But today’s bounce failed to make up for losses earlier this week, when fears of an economic slowdown and weaker-than-expected earnings dragged down the major stock indexes. All three ended the week down more than 1%. The Russell 2000, an index of small companies that reached record highs just a week earlier, ended the week down 3.7%.
The higher jobs number helped stem a sell-off in commodities brought on by fears that the economy was sputtering. Regular investors and speculators had begun to flee commodities in an effort to lock in profits in case the economy slowed even further.
“The jobs report put an end to the idea that growth appeared to be weakening, which is what really fuelled most of the declines in commodities this week,” said Jeffery Kleintop, the chief strategist at LPL Financial.
The dollar also got a lift. An index that measures the dollar against six major currencies gained 1%.
Financial markets are markedly different from this time last year. Today marks the one-year anniversary of the “Flash Crash”. Stocks tumbled that day when one large trade overwhelmed the market’s computer servers and sent prices into a tailspin. Though stock prices made up most of their losses that day, the sudden drop fuelled scepticism that stocks were a safe investment. That led many investors to pull money out of the stock market.
Two shares rose for every one that fell on the New York Stock Exchange. Trading volume was 4.4 billion shares.
