Stocks dropped briefly in early trading after the Department of Labor released an unexpectedly hopeful monthly jobs report, but rallied to strong gains ahead of the closing bell heading into the holiday weekend.
Data from the Labor Department showed the economy adding 195,000 jobs in the month of June, beating expectations by 30,000. While the official unemployment rate remained at 7.6 percent, missing expectations of 7.5 percent, revisions to April and May’s data added a combined 70,000 more jobs than had previously been thought.
While the report has been seen as yet another confirmation that the economy is slowly but steadily improving, recent concerns about the Federal Reserve’s fiscal stimulus program have created a climate in which positive economic data points can be more a source of anxiety than a cause for celebration. The Federal Reserve has made it clear that its cutting back on $85 billion a month in asset purchases, which it would like to begin as early as September, if possible, will be conditional upon more inflation and lower unemployment, and investors have been concerned about how markets and the economy will fare when the time comes for government support to be withdrawn.
After dipping into negative territory late on Friday morning, however, and with the yield on the 10-year treasury note climbing to as high as 2.7 percent, indices bounced back to end the week on solid advances, as it appeared, if only momentarily, that investors were coming around to the Federal Reserve’s longer-term view on the heath of the economy.
The Standard & Poor’s 500 was up 1.02 percent to close the week out at 1,631.89 points, while the Dow Jones Industrial Average rose 0.98 percent to end at 15,135.84 points, and the NASDAQ jumped 1.04 percent to 3,479.38.
15 of the top 20 gainers on the S&P 500 were financial stocks, led by Lincoln National Corp. (LNC) up 5.4 percent, KeyCorp (KEY) up 5 percent, and First Horizon National Corporation (FHN) up 4.5 percent.
Financial stocks also did well on the Dow, with American Express Company (AXP) and JPMorgan Chase & Co. (JPM) at the top of the index by closing time. On the NASDAQ, Tesla Motors (TSLA) jumped 4.2 percent to $120 on news of plans to expand operations into Asian markets.
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