The US stock market had its best day in two months on May 8 following good news about the job market. The surge was enough to push two of the three major US indexes to gains for the week. Investors were encouraged that US employers added 223,000 jobs in April, a solid gain suggesting that the economy may be recovering after a stumbling start to the year. While the jobs report is always closely watched, April’s survey garnered even more interest than usual after a poor March, which had revised figures showing only 85,000 jobs were added to payrolls.
“I am even more convinced that the March report was an outlier,” Paul Christopher, an investment strategist with Wells Fargo Advisors. “We all know the first quarter was a tough quarter. The jobs numbers needed to hold up and they did.” The Dow Jones industrial average jumped 267.05 points, or 1.5 per cent, to 18,191.11 on Friday. The Standard & Poor'’ 500 index added 28.10 points, or 1.4 percent, 2,116.10, its biggest percentage gain since March 16. The Nasdaq composite rose 58 points, or 1.2 per cent, to 5,003.55.
Both the Dow and S&P 500 ended fractionally higher for the week, while the Nasdaq ended down less than 0.1 percent. The bond market had a more nuanced take on the employment report. Investors bought bonds, pushing down the yield on the US.10-year Treasury note to 2.14 per cent from 2.18 per cent on Thursday. That rate had been as high as 2.30 per cent just two days ago, representing a big move for that market.
Bond traders noted that while the job survey was positive overall, there were several troubling signs, including sluggish wage growth. The disappointing March number also cast doubt on how solid the economy's footing is. As a result, they said, the Federal Reserve could hold off longer than previously expected before raising interest rates. “These numbers are starting to lead investors to the same conclusion that the Fed will not lift rates through 2015,” said Tom di Galoma at ED&F Man Capital.
European markets also rose sharply after David Cameron's Conservative Party won an outright majority in Britain's Parliament, greatly reducing the threat of political uncertainty there. Britain’s FTSE 100 rose 2.3 percent, Germany’s DAX rose 2.6 percent and France's CAC 40 gained 2.5 percent. Prices for European government bonds rose broadly, sending yields lower. The British pound advanced sharply against the dollar and euro.