Stocks move higher after strong employment report
Stocks in the US gained traction as accommodative policy statement from the ECB and the BoE gave investors’ confidence in the wake of the US employment report. Stronger than expected data early in the week helped stock traders gain momentum driving up the prices of stocks into the non-farm payroll report.
Prior to the opening bell, investors needed to absorb Friday’s employment report. Non-farm payrolls came in at 195,000 compared to the 160K expected by economists. Both the May and June reports where stronger than expected increasing the oversold number of jobs increase by 70,000 jobs. May’s job report was increased by 50K jobs to 199K jobs. Average hourly earnings increased by 10 cents or .4% while the unemployment rate remained steady at 7.6%. Private sector jobs increased by 202K jobs while government jobs declined by 7,000. Part time jobs continued to increase at a steady pace. The labor participation rate increased to 63.5% compared to May’s level of 63.4%.
Stocks surged after the release of the number, as the dollar gained strength, and interest rates climbed. The 10-year government bond yield increased by 11 basis points, while the dollar jumped half a big figure against both the Euro and the pound.
Stocks futures were higher prior to the release of the report on the heels of Thursday accommodative comments from both the ECB and the BoE. Both central banks assured investors that rates would remain low for an extended period of time.
The S&P 500 index closed near session high up slightly more than a percent and recapturing the 50-day moving average. Momentum is gaining strength with the MACD generating a buy signal as the spread (the 12-dy moving average minus the 26-day moving average) crossed above the 9-day moving average of the spread.
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