Sun, Jul 10, 2016 - Page 14 News List

Strong jobs report drives up US stocks

BOOST OF CONFIDENCE:US employers added 287,000 jobs last month, far more than analysts expected, allaying fears that the US job market has run out of steam

AP, NEW YORK

US stocks surged on Friday, finishing just short of record highs, as investors responded enthusiastically to a strong job market report for last month.

The buying accelerated throughout the day after the US Department of Labor said US employers added 287,000 jobs last month. That was far more than analysts expected, and after weak reports from April and May, it suggests the economy and job market have not run out of steam.

“It was a strong report and it put to bed worries that we were seeing the job market sputter,” Edward Jones investment strategist Kate Warne said.

Mining and materials companies, which would stand to benefit more than other industries from an accelerating economy, took the biggest gains. Machinery makers also jumped. Only eight stocks on the Standard & Poor’s 500 finished lower.

The Dow Jones Industrial Average surged 250.86 points, or 1.4 percent, to 18,146.74. The S&P 500 rose 32 points, or 1.5 percent, to 2,129.90. The NASDAQ composite advanced 79.95 points, or 1.6 percent, to 4,956.76.

The government said the unemployment rate rose slightly as more people looked for jobs. There was also evidence wages were rising faster. The April and May reports worried investors, in part because they came after the economy grew just 1.1 percent over the first three months of the year. The US economy has been growing for more than six years and investors are wary that streak could end.

Among material and industrial companies, paint and coatings maker PPG Industries added US$3.29, or 3.2 percent, to US$106.32, and aluminum producer Alcoa picked up US$0.48, or 5.2 percent, to US$9.82. Machinery maker Caterpillar climbed US$2.32, or 3.1 percent, to US$77.37, and aerospace company Boeing gained US$2.92, or 2.3 percent, to US$130.09.

Retailer Gap climbed after it said sales at stores open at least a year grew last month, as Old Navy results improved. Sales at those stores are considered an important measure of retailers’ results, and Thomson Reuters said it was the first improvement in that gauge for Gap in more than a year. Analysts expected another decline this month.

Gap stock rose US$1.07, or 4.9 percent, to US$22.70. The stock is down 8 percent this year.

Videoconferencing equipment maker Polycom said it would be taken private by Siris Capital. It accepted an offer from Siris worth US$12.50 per share, or US$1.7 billion. Polycom accepted an offer from Mitel Networks in April. Polycom stock gained US$1.38, or 12.7 percent, to US$12.25. Mitel, which will get a US$60 million payment from Polycom, climbed US$1.19, or 19.8 percent, to US$7.21.

The S&P 500 is less than 1 point away from the record high it set in May last year. The Dow, too, is close to a record. They reached those peaks before investors got very worried about the slowdown in China’s economy, before the US Federal Reserve started raising interest rates for the first time in almost nine years, and before anyone thought Britain might really vote to leave the EU.

While all of those concerns have hurt stocks, they have recovered. However, it has been a very careful, uneasy rally. The stocks that have done the best in the last year telcos and utilities, which pay big dividends and are considered safe. US bond yields have set all-time lows in the last few days.

US economic growth has been steady, but uninspiring, and corporate profits and revenues are in a slump. However, the alternatives do not look any better. China has been shaky. The economies of Japan and Europe are weak, and the yields on some European bonds are negative as nations try to boost their economic growth. That means investors have to pay to own those bonds. So even if US stocks are not setting the world alight, they have been good enough.

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