Stocks make a big jump
NEW YORK - Good news was finally good news for the stock market Friday. Prices rose sharply after the government reported a fourth straight month of solid job gains, the latest encouraging sign for the economy.
NEW YORK - Good news was finally good news for the stock market Friday. Prices rose sharply after the government reported a fourth straight month of solid job gains, the latest encouraging sign for the economy.
The strengthening job market focused investors on the nation's improving economy instead of concerns about the Federal Reserve's stimulus, snapping a five-day losing streak for stocks.
Stocks had been falling this week after a string of positive economic reports made investors worry that the Fed would soon pull back on its $85 billion in monthly bond purchases, which have kept long-term interest rates low and supported the stock market.
Now that hiring is showing consistent strength, investors seem to be letting go of their worry that the economy is not ready for the Fed to start weaning the U.S. off stimulus.
"The jobs report was outstanding," said Randy Frederick, a director of trading and derivatives at Charles Schwab. "It's refreshing to see the markets react positively, because we've been in a mode for so long of 'good news is bad news.' "
Employers added 203,000 jobs last month after adding 200,000 in October, the Labor Department said Friday. November's job gain helped lower the unemployment rate to 7 percent from 7.3 percent in October.
Stocks jumped at the open and moved higher throughout the day. The Dow Jones industrial average rose by as much as 200 points in early afternoon trading before easing back slightly before the close.
The Dow closed up 198.69 points, or 1.26 percent, to 16,020.20. The Standard & Poor's 500 index rose 20.06 points, or 1.12 percent, to 1,805.09, its biggest gain in a month. The Nasdaq composite climbed 29.36, or 0.73 percent, to 4,062.52.
Friday's jobs news follows other upbeat signals this week on housing, manufacturing, and economic growth.
Signs that the recovery is becoming more entrenched may lure more buyers back into the market, supporting prices, said JJ Kinahan, chief derivatives strategist at TD Ameritrade. Despite steady gains for the stock market over the last five years, some investors have remained wary after the collapse of 2008.
"We're seeing good numbers," Kinahan said. "Does this encourage people who have been underinvested all year to come in and spend some money on the market?"