Wall Street is rising after a report on massive jobs numbers

Stan Choe
| Associated Press

new York – U.S. stocks rose on Friday amid a wave of optimism after a report showed U.S. employers enjoyed a stronger hiring boom last month.

The S&P 500 rose 0.3% in morning trading after paring a larger gain earlier in trading. The Dow Jones Industrial Average was up 118 points, or 0.3%, as of 10:15 a.m. Eastern time, and the Nasdaq Composite was up 0.4%.

Banks, cruise ship operators and other companies whose profits tend to benefit most from a stronger economy led the way. Norwegian Cruise Line rose 5.6%, JPMorgan Chase rose 1.9% and small companies in the Russell 2000 index rose 1.1%. However, declines in some of the market’s heavyweights kept the indexes under control, including a 0.4% decline in Apple.

Stock indexes are clawing back some of their losses from earlier in the week on fears that rising tensions in the Middle East could lead to disruptions in global oil flows. Crude oil prices rose again on Friday, but the moves were more modest than earlier in the week as the world continues to wait to see how Israel will respond to Iran’s missile attack starting Tuesday.

Meanwhile, the strength of the US economy regained its place as a driving force in markets.

Treasury yields jumped in the bond market after the U.S. government said employers added 254,000 jobs more than they cut last month. That was an acceleration from August’s hiring pace of 159,000 and beat economists’ forecasts.

According to Lindsay Rosner, head of cross-sector investing at Goldman Sachs Asset Management, it was a “grand slam” report. She said Federal Reserve policymakers, who have been trying to manage the difficult task of keeping the economy afloat while keeping inflation under control, “have to be smiling.”

Friday’s report capped a week of mostly encouraging labor market data, including an update that suggested layoffs remain relatively low. That strength helps ease one of Wall Street’s key questions: whether the job market will continue to hold after the Federal Reserve previously left interest rates at two-decade highs.

Ahead of Friday’s jobs report, data showed the overall trend was a slowdown in hiring among U.S. employers. That’s not surprising, considering the Fed was trying to slow the economy hard enough to curb high inflation.

But Friday’s stunning numbers bolstered hopes that the U.S. economy will indeed avoid a recession, especially now that the Federal Reserve has made a drastic policy shift and begun cutting interest rates to give it more momentum. The Fed cut its key interest rate last month for the first time in more than four years and indicated there would be further rate cuts next year.

Friday’s jobs data was strong enough to prompt traders to cut their forecasts for how much the Federal Reserve will cut interest rates at its next meeting in November. According to data from CME Group, they now forecast a less than 10% chance that the Fed will make another larger-than-average rate cut of half a percentage point. That’s less than the chance seen with a toss of more than one coin a week ago.

That, in turn, pushed the two-year Treasury yield to 3.86% from 3.71% late Thursday. The 10-year yield, which takes future economic growth and inflation into account more than the two-year yield, rose to 3.95% from 3.85%.

Also on Friday, about 45,000 longshoremen at ports on the East and Gulf Coasts will return to work after their union reached an agreement to suspend their three-day strike until Jan. 15 to allow time to negotiate a new contract. This helped allay fears that a prolonged strike may have driven up inflation and weighed on the economy.

Of course, there is still no all-clear from the Federal Reserve on whether it has succeeded in reducing inflation to its 2% target while maintaining economic growth.

“This report tells the Fed that it still needs to be cautious as a strong labor market and challenging housing and housing data show that it will not be easy to significantly reduce inflation in the near term,” said Scott Wren, senior director global market strategist at Wells Fargo Investment Institute.

In the oil market, the price of a barrel of Brent crude, the international standard, rose 1.1% to $78.45 a barrel and is up more than 9% this week. A barrel of U.S. crude rose 0.9% to $74.38, from around $68 at the start of the week.

On stock markets abroad, indices rose across much of Europe following the strong jobs report from the world’s largest economy.

In Asia, Hong Kong’s Hang Seng rose 2.8% in its latest sharp swing. The stock rose just over 10% this week on excitement over Beijing’s numerous recent announcements aimed at supporting the world’s second-largest economy.

___

AP business reporters Yuri Kageyama and Matt Ott contributed.

Wall Street is rising after a report on massive jobs numbers

ByJasper

By Jasper

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