By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Economy adds 223,000 jobs in April, unemployment rate at
5.4%
U.S. stocks soared on Friday, with the Dow industrials posting
their largest one-day point gain in more than three months. Solid
gains on Friday helped the S&P 500 and Dow end the turbulent
week with modest gains.
Sentiment was lifted by nonfarm-payrolls data, which pointed to
a pace of employment growth that was healthy enough to suggest that
the economy may be on solid footing, but not so much as to quicken
the first Federal Reserve rate hike.
The U.S. economy added 223,000 jobs last month, while the
unemployment rate fell to 5.4%, largely in line with
expectations.
Scott Wren, senior global equity strategist at Wells Fargo
Investment Institute, said the jobs number was good but not great
and exactly what the market needed to head higher.
"It was a healthy jobs number, indicating the economy is doing
OK, but it's unlikely to sway the Federal Reserve too much," Wren
said.
The solid employment report put the major indexes on track to
finish the week slightly higher after a tumultuous week of
trading.
The S&P 500 (SPX) closed 28.09 points, or 1.4%, higher at
2,116.09 and gained 0.4% over the week. All 10 main sectors
finished higher on Friday. The Dow Jones Industrial Average (DJI)
jumped 267.05 points, or 1.5%, to 18,191.11 and finished the week
0.9% higher. The Nasdaq Composite (RIXF) ended the session 58
points, or 1.2%, higher at 5,003.55 and finished the week roughly
where it started.
"Despite the 5.4% unemployment rate, we believe there are still
too many people who are part-time or marginally attached, which is
why we are not seeing wage increases," Wren said.
JJ Kinahan, chief strategist at TD Ameritrade, said stocks may
continue to advance in a low-rate environment as investors chase
richer returns that can't be obtained in haven-investment like
bonds.
"It is a good day for the stock market, but I would agree that
the reaction may be a little overdone. As big today's jump is, we
are still not breaking out of the range that we had been stuck for
months," Kinahan said referring to a range of 2,080 and 2,112 on
the S&P 500.
"Certainly, the jobs number took the edge off the disappointing
[gross-domestic product] growth in the first quarter, and there is
more evidence that March was an anomaly and weather related,"
Kinahan added.
Randy Frederick, Managing Director of Trading and Derivatives at
the Schwab Center for Financial Research, said that the market
anticipated a much weaker jobs number leading up to Friday and
solid gains in employment resulted in a relief rally.
Frederick expects the market to trade sideways for some time.
"There are not many news that would take the market higher to new
records, but equally not many news that would take it substantially
down either," he noted.
Friday's data:April jobs numbers
(http://www.marketwatch.com/story/us-jobs-creation-springs-back-in-april-with-223000-gain-2015-05-08)
reflect a sharp rebound in employment numbers after a revised
85,000 gain in March. The increase in jobs and greater numbers
entering the labor force helped the unemployment rate move to 5.4%
from 5.5%, marking the lowest level since May 2008, the Labor
Department said Friday.
The average hourly wages rose partly 0.1% last month, while
wages in the past 12 months have risen at a 2.2% rate.
Job report gives Fed green light to move in September
(http://www.marketwatch.com/story/job-report-gives-fed-green-light-to-move-in-september-2015-05-08)
Stocks to Watch:AOL Inc.(AOL) reported first-quarter profit and
sales that beat expectations
(http://www.marketwatch.com/story/aols-stock-climbs-after-profit-sales-beat-expectations-2015-05-08).
Shares jumped 10%.
McDonald's Corp.(MCD) shares rose 1.5% after the company
released April sales numbers, which showed a 0.6%--less than
expected by analysts.
Nvidia Corp.(NVDA) shares slid 7.5% after the graphics chip
company provided a downbeat sales outlook.
For more on today's notable movers read Movers & Shakers
column
(http://www.marketwatch.com/story/mcdonalds-aol-liberty-media-in-focus-2015-05-08).
Other markets: The FTSE 100 index surged
(http://www.marketwatch.com/storyno-meta-for-guid) on news of an
expected election victory
(http://www.marketwatch.com/story/conservatives-on-course-for-election-victory-in-the-uk-2015-05-08)
in the U.K. for Conservatives. European equity markets rallied,
with the benchmark Stoxx 600 (STXX) index gaining 2.9%.
Chinese stocks suffered their biggest weekly loss, though the
index managed a gain of 2.3% on Friday. That weekly loss is its
worst performance since May 2010.
Oil prices
(http://www.marketwatch.com/story/crude-oil-prices-slip-ahead-of-us-payrolls-data-2015-05-08-21035042)(CLM5)
settled 0.8% higher at $59.39 a barrel, erasing losses for the
week. Gold futures
(http://www.marketwatch.com/story/gold-adds-to-weekly-gain-ahead-of-jobs-report-2015-05-08)(GCM5)
climbed 0.6%, to $1,188.90, rising 1.2% over the week.
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