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Markets flourish on positive jobs report

A trader works the floor at the New York Stock Exchange after Friday’s positive jobs report. “It was beyond all expectations, literally,” Lawrence Creatura of Federated Investors says.

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A trader works the floor at the New York Stock Exchange after Friday’s positive jobs report. “It was beyond all expectations, literally,” Lawrence Creatura of Federated Investors says.

Dow

Highest since: May 2008

On Friday: +156.82

Nasdaq

Highest since: December 2000

On Friday: +45.98

S&P 500

Highest since: July 2011

On Friday: +19.36

NEW YORK — A drop in the unemployment rate to its lowest level in three years propelled the Dow Jones Industrial Average on Friday to its highest close since May 2008, before the financial meltdown later that year. The Nasdaq composite index hit an 11-year high.

The Dow jumped 156.82 points to 12,862.23, its highest mark since May 19, 2008, about four months before the Lehman Brothers investment bank collapsed.

In May 2008, credit markets were tightening up, subprime mortgages were going sour and Bear Stearns had already collapsed.

Before the market opened Friday, the Labor Department said the economy added 243,000 jobs in January. It was the strongest job growth in nine months. The increase in hiring pushed the unemployment rate down to 8.3 percent, the lowest since February 2009.

The Nasdaq index closed 45.98 points higher at 2,905.66, its highest since December 2000, during the steep decline that followed the dot-com stock bubble.

The price of ultrasafe Treasury notes dropped, sending yields higher, and the price of oil rose for the first time in a week.

"In this economy, only one variable matters right now, and that variable is employment," said Lawrence Creatura, an equity portfolio manager at Federated Investors. "This report was great news. It was beyond all expectations, literally. The number was higher than even the highest forecast."

The Standard & Poor's 500 index added 19.36 points, or 1.3 percent, to 1,344.90, its highest close since July. The S&P 500 surged 2.2 percent for the week, its fifth straight week of gains. That's the longest weekly winning stretch since January of 2011.

More evidence that the economy is gaining strength followed the jobs report.

A trade group said the service industry expanded at the fastest pace since last February. The government also said factory orders rose 1.1 percent in December, supported by a rebound in orders for heavy machinery.

Treasury prices fell, lifting the yield on the 10-year note Treasury to 1.93 percent. When bond prices fall, yields rise. The benchmark 10-year rate had traded below 1.79 percent earlier this week as traders bought U.S. Treasurys on renewed concern over Europe's ongoing debt crisis.

Worries over Europe's debt troubles still have the potential to send markets reeling in the months ahead, Creatura said. He expects the S&P 500 to continue surging but still hit patches of turbulence from Europe in the coming months.

"It's not over yet," he said. "Even though it appears our aircraft is taking off, you should still keep your seat belt fastened."

Dow

+156.82

closing: 12,862.23

highest since: May 2008

Nasdaq

+45.98

closing: 2,905.66

highest since: December 2000

S&P 500

+19.36

closing: 1,344.90

highest since: July 2011

12,862.232,905.661,344.90

Markets flourish on positive jobs report 02/03/12 [Last modified: Friday, February 3, 2012 11:19pm]
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