Dow jumps 200 pts on job gains; Gold, bonds fall
NEW YORK (AP) — The Dow Jones industrial average jumped 200 points Friday afternoon after a surge in hiring by U.S. employers added to evidence that America’s economy is strengthening, even as other countries stumble.
The good news pushed up the value of the dollar against other major currencies to the highest level in four years. U.S. bonds and gold fell as investors anticipated higher interest rates.
KEEPING SCORE: The Dow rose 200 points, or 1.2 percent, to 17,001 as of 2 p.m. Eastern time. The index is on track for its third 200-point gain or loss in a little over a week as markets turn more volatile.
The Standard & Poor’s 500 index climbed 22 points, or 1.1 percent, to 1,968. The Nasdaq composite rose 52 points, or 1.2 percent, to 4,482. Even with the gains, all three indexes are headed for a second week of losses.
ANALYST’S TAKE: “The solid payroll report is great for economic growth and stock prices,” said Anastasia Amoroso, global market strategist at J.P. Morgan Funds. “The U.S. really stands out” from the rest of the world.
STRONG HIRING: U.S. employers added 248,000 jobs in September, beating market expectations of a 215,000. The hiring helped drive down the unemployment rate to 5.9 percent, the lowest since July 2008. Hiring in July and August was also stronger than initially estimated, the Labor Department said.
RATES: The Federal Reserve is closely watching the job and wage growth to determine when to start raising interest rates. Most economists predict the Fed will start raising rates in mid-2015. The central bank’s low-rate polices have helped keep borrowing rates low for consumers and businesses. Stronger hiring could increase pressure on the Fed to raise rates and keep the growing economy from sparking inflation. However, with inflation still low, investors are betting that the Fed could keep interest rates at record lows well into next year to try to boost the economy more.
EUROPE’S STRUGGLES: The good U.S. news contrasts with troubling signs in Europe. On Thursday, the European Central Bank disappointed investors by not announcing details of more stimulus measures as the 18-country eurozone once again teeters on recession. Stocks rose there on Friday, but major European indexes are still down sharply for the week.
DOLLAR SPIKES: The U.S. Dollar Index, which measures the dollar against six other major currencies, surged 1.1 percent to its highest level in more than four years. The euro fell 1.2 percent to $1.2514 while the dollar gained 1.2 percent to 109.72 yen.
DRUG HIGHS: Shares of Mylan jumped 9 percent after the generic drugmaker raised its outlook for the third quarter and year. The stock rose $4.07 to $50.57. Salix Pharmaceuticals rose nearly 1.7 percent. The company gained on news it is scrapping its merger with the subsidiary of an Italian drugmaker after the U.S. created new limits on the tax benefits of incorporating overseas. The stock was up $2.58 to $153.67.
HONG KONG: Hong Kong’s Hang Seng index erased an early loss and closed up 0.6 percent, even as pro-democracy protests continue. Stocks rallied after Chief Executive Leung Chun-ying offered talks with protesters, who oppose plans to require candidates in the 2017 election to be approved by a panel dominated by pro-Beijing business leaders. Protesters say the communist mainland government is reneging on a promise of “universal suffrage” for the territory. Stocks in retailing and tourism have plunged, but analysts say the economic impact of the protests is limited.
ENERGY: The price of benchmark U.S. crude oil fell $1.04 to $89.97 a barrel in New York on concern that supplies exceed global demand.
GOLD AND BONDS: Prices for gold and Treasurys fell as traders moved money out of assets that are considered safer. Gold fell 1.8 percent to $1,193.30 an ounce. The yield on the 10-year Treasury note rose to 2.44 percent from 2.43 on Thursday.