U.S. stocks jumped in early trading Friday, helped by a report that showed businesses were still hiring workers at a steady pace with 223,000 jobs added in April, sending unemployment rate to a 7-year low of 5.4 percent. Foreign markets were also getting a lift from the results of the election in the United Kingdom, where the David Cameron’s Conservative Party won an outright majority in Parliament.
Jobs, Jobs, Jobs
Investors cheered a report that showed U.S. employers added 223,000 jobs in April, a solid gain that suggests that the economy may be recovering after a stumbling start to the year. The unemployment rate fell to 5.4 percent from 5.5 percent in March, the lowest rate since May 2008.
While the jobs report is always closely watched, April’s figures garnered even more interest. The March jobs report was particularly abysmal, with employers creating only an adjusted 85,000 jobs that month.
“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 bond market continued its week of heightened volatility. The U.S. 10-year Treasury note traded at a yield of 2.11 percent, down significantly from 2.18 percent the day before.
The Conservative Party surged to get a majority lead in Britain’s parliamentary election, meaning Cameron will remain in power. The clarity of the result eased concerns among investors, who had been worried that an uncertain outcome could lead to political haggling to create a new government. The British pound jumped 2 percent overnight against the dollar to its highest level since February. It held onto the gains Friday, trading at $1.5423.
“The U.K. general election result is a surprisingly market-friendly outcome and removes the risk that the economy suffers a prolonged period of political uncertainty,” said Vicky Redwood from Capital Economics in London.
In the longer-term, however, a Conservative win means the U.K. will hold a referendum within two years about leaving the European Union, a big decision that could unsettle business confidence.
Major indexes in Europe jumped on the results of the election. Britain’s FTSE 100 jumped 2.2 percent, Germany’s DAX rose 1.7 percent and France’s CAC 40 gained 1.6 percent. Prices for European government bonds rose broadly, sending yields lower.
Article by The Associated Press