Stocks soar on surprisingly strong July job report

NEW YORK (AP) — Stocks are surging on Wall Street,
breaking a four-day losing streak, after the government reported a sharp
pickup in hiring by U.S. employers in July.
The Dow Jones
industrial average shot up 226 points to 13,105 as of 3 p.m. on Friday.
The Dow was heading for its best day since June 29.
Markets had
been slumping all week after central banks in the U.S and Europe took no
new action to shore up the economy, as many investors had hoped.
The
Labor Department’s closely watched monthly jobs report gave investors
assurance that the U.S. economy may be doing better all on its own. U.S.
employers added 163,000 jobs last month, a sharp turnaround following
months of sluggish hiring.
Between April and June, the economy
added an average of just 73,000 jobs a month compared with 226,000 jobs
per month in the first three months of the year.
"It’s one step
forward," said Joe Bell, senior equity analyst at Schaeffer’s Investment
Research. "But we would like to see continued improvement in the labor
market in coming months."
There was also some good news from the
service sector, a broad part of the economy that includes banking,
retail, health care and utilities.
The Institute for Supply
Management reported that U.S. service companies grew at a slightly
faster pace in July, with a reading of 52.6. Any number above 50 means
that business is growing for service providers.
The benchmark
10-year Treasury note was yielding 1.58 percent, up from 1.48 percent on
Thursday. Bond yields rise when investors move money out of low-risk
assets like U.S. government debt.
Oil prices also soared as
investors became more optimistic about the economy following the jump in
hiring by U.S. employers. Benchmark crude shot up $4.46 to $91.58 on
the New York Mercantile Exchange.
The broader Standard & Poor’s 500 index rose 28 points to 1,393, and the Nasdaq composite added
62 points to 2,972.
Despite
the gain in hiring, there were still enough signs of weakness in the
latest jobs report to keep hope alive that the Federal Reserve may take
new steps to kick-start the economy at its next meeting in September. A
separate survey of households by the Labor Department found that the
unemployment rate rose to 8.3 percent in July from 8.2 percent in June.
"I’m
not ready to declare victory just yet," said Uri Landesman, president
of hedge fund Platinum Partners. "Lending activity is still pretty low
because banks aren’t taking that much risk, and it’s hard for an economy
to expand when banks are on tenterhooks themselves."
At the end
of a two-day policy meeting this week, the Fed said it would take action
on the economy "as needed to promote a stronger economic recovery."
Also on Thursday, markets fell sharply after the European Central Bank
didn’t announce specific plans to tackle the continent’s debt crisis, as
many investors expected it would.
Several U.S. companies turned
in strong earnings reports. Procter & Gamble, which makes Tide,
Bounty, NyQuil and many other consumer products, reported a 45 percent
surge in quarterly earnings, easily beating Wall Street’s forecasts.
P&G’s stock rose $2.20 to $65.70.
Other stocks making big moves included:

Knight Capital galloped 58 percent after the company obtained an
emergency credit line, according to news reports. The trading firm was
responsible for stock market disruptions on Wednesday which will cost it
$440 million. The stock had fallen 75 percent over the previous two
days. On Friday, the stock rose $1.43 to $4.01.
— LinkedIn shot up
$14.35 to $107.86. The social media company reported that its
second-quarter revenue increased faster than analysts had expected.
LinkedIn also raised its full-year revenue forecast.
— Kraft Foods
rose $1.65 to $40.59 after reporting a 5 percent jump in its
second-quarter profit. Higher prices helped offset a drag from
raw-materials costs and currency exchange rates.
— Zipcar
plummeted $3.55 to $7.08. The stock reached an all-time low Friday after
the car-sharing network reported lower-than-expected revenue in the
second quarter and cut its annual revenue estimate.
Copyright 2012 The Associated Press.