US stocks approach records after strong jobs report

Posted at 3:18 PM, Aug 05, 2016

NEW YORK (AP) — U.S. stocks are jumping Friday and are closing in on record highs after a strong July jobs report gave investors more confidence that the economy is still growing. The Labor Department said employers added 255,000 jobs, far more than experts expected. Bank stocks rose on the prospect of higher interest rates, while tech stocks and consumer companies also made big gains.

KEEPING SCORE: The Dow Jones industrial average surged 179 points, or 1 percent, to 18,530 as of 3:33 p.m. Eastern time. The Standard & Poor's 500 index rose 17 points, or 0.8 percent, to 2,181. The Nasdaq composite gained 55 points, or 1.1 percent, to 5,221. While the S&P 500 set all-time highs two weeks ago, it's been a little more than a year since the Nasdaq set a record as it's lagged the other two major indexes.

JOBS RELIEF: The strong jobs report suggests that Britain's vote to leave the European Union in late June didn't have much effect on U.S. companies' hiring plans. The unemployment rate remained at 4.9 percent and hourly pay continued to rise. The hiring spree follows an even larger surge in June and represents a turnaround from weak job growth in the first half of this year, including disappointing job gains in April and May. Investors reacted by selling traditionally safe assets like bonds, utilities and phone company stocks, and precious metals.

THE QUOTE: Kate Warne, an investment strategist for Edward Jones, said the report reassured investors but won't vanquish their fears entirely.

"With an election where both candidates are likely to talk about how badly the economy is doing and how disappointing growth has been, investors as a whole are more anxious than the job picture would suggest," she said.

EYES ON THE FED: The Federal Reserve has been saying for months that it intends to raise interest rates if the economy's strength warrants it. July's report provides more evidence the economy is doing well, boosting the chances of a rate increase. But Warne said investor views on the economy and the Fed will keep fluctuating.

"When the Fed indicates that they're data dependent, that means investors are going to be data dependent as well," she said.

Banks rose the most, as higher interest rates boost their profits on lending. Bank of America rose 53 cents, or 3.7 percent, to $15.01 and Citigroup added $1.67, or 3.8 percent, to $45.52.

TOWERING TECH: Technology companies have led the market higher over the last few months as investors gradually regain confidence in the economy. That's boosted the Nasdaq, which has a high concentration of tech stocks.

"It looks like the economy is improving, it looks like corporate earnings are on the upswing," said Sam Stovall, U.S. equity strategist for S&P Capital IQ. That marks a change from earlier this year, he said, when investors worried the U.S. would fall into a recession and tech companies would suffer as businesses cut spending.

BONDS: Bond prices fell and the yield on the 10-year U.S. Treasury note jumped to 1.59 percent from 1.50 percent.

A TASTE FOR KRAFT: Kraft Heinz, the company behind Oscar Mayer bologna, Jell-O pudding and Velveeta cheese, also traded higher after it reported a larger profit than analysts expected. Its stock picked up $3.10, or 3.6 percent, to $88.65.

SECURITY: Security software maker FireEye tumbled after it reported weak sales, cut its estimates for billings and revenue, and said it will eliminate 300 to 400 jobs to reduce costs. Its stock plunged $2.04, or 12.2 percent, to $14.71. Security software rival Symantec disclosed a larger profit and better sales than expected in its fiscal first quarter, and its full-year profit forecast was stronger than expected. Its stock climbed 88 cents, or 4.2 percent, to $21.91.

LUNG CANCER TREATMENTS: Bristol-Myers Squibb stock sank $12.06, or 16 percent, to $63.26 after the company said its drug Opdivo did not halt progression of non-small cell lung cancer in a clinical study. Opdivo is used to treat several types of cancer and it brought in $1.5 billion in revenue for Bristol-Myers in the first half of this year, but the company is running more studies in the hope of winning new marketing approvals.

The failure boosted shares of Merck, which also makes a drug that stimulates patients' immune systems to fight lung cancer. The company, which took in $533 million from its drug Keytruda this year, rose $5.67, or 9.8 percent, to $63.51.

ENERGY: Benchmark U.S. crude slid 13 cents to $41.89 per barrel in New York while Brent crude, used to price international oils, dipped 2 cents to $44.27 a barrel in London.

METALS: The price of gold fell $23, or 1.7 percent, to $1,344.40 an ounce. That was its biggest loss since May. Silver fell 63 cents, or 3.1 percent, to $19.82 an ounce. Copper lost 2 cents to $2.15 a pound.

OTHER ENERGY TRADING: Wholesale gasoline held steady at $1.38 a gallon. Heating oil lost 1 cent to $1.32 a gallon. Natural gas fell 6 cents to $2.77 per 1,000 cubic feet.

CURRENCIES: The dollar rose to 101.73 yen from 101.17 yen and the euro fell to $1.1099 from $1.1127.

OVERSEAS: France's CAC-40 rose 1.5 percent and the DAX in Germany advanced 1.4 percent. London's FTSE 100 was 0.8 percent higher. The Shanghai Composite Index shed 0.2 percent and Tokyo's Nikkei 225 was little changed. In South Korea, the Kospi rose 0.9 percent.