Market jumps on strong jobs report

Specialist Anthony Rinaldi, right, works with traders on the floor of the New York Stock Exchange Friday, a day when stock indexes jumped back into record territory after encouraging economic reports.
Specialist Anthony Rinaldi, right, works with traders on the floor of the New York Stock Exchange Friday, a day when stock indexes jumped back into record territory after encouraging economic reports. Richard Drew/AP Photo

New York - Good news was finally good news for the stock market on Friday.

Stocks rose sharply in afternoon trading after the government reported a fourth straight month of solid U.S. 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. That shift helped snap a five-day losing streak for stocks.

Stocks had been falling this week after a series 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 appear to be letting go of their earlier worry that the economy isn't ready for the Fed to start weaning the U.S. off that 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.'"

The Standard & Poor's 500 index rose 16 points, or 0.9 percent, to 1,801 as of 3:40 p.m. Eastern time. The Dow Jones industrial average was up 186 points, or 1.2 percent, to 16,008. The Nasdaq composite climbed 24, or 0.7 percent, to 4,057.

All 10 sectors in the S&P 500 index rose. Industrial stocks were among the leading gainers after Friday's report showed that manufacturers added 27,000 jobs, the most since March 2012.

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 stock 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?"

Friday's gains ended a mini-slump for the stock market in December. Fears of the Fed pulling back on its stimulus had made traders nervous when they saw the slew of good economic reports.

The good-news-is-bad-news attitude has at times stalled the market's impressive run-up this year. The S&P 500 index fell 1.5 percent in June when Fed chairman Ben Bernanke said that policy makers could start scaling back stimulus later in the year. In August, the market dipped again, falling 3.1 percent, as bond yields climbed in anticipation of the end of stimulus.

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