US stocks rose sharply as investors cheered a job report that showed that US job growth rebounded in April and the unemployment rate dropped; an indicator that the labor market remained solid despite a slowdown in economic growth.
According to the report by the Labor department, nonfarm payrolls grew by 223,000 in April compared to the 85,000 recorded in March.
The growth was slightly below the 228,000 jobs growth consensus estimate of analysts polled by the Wall Street Journal.
The unemployment rate for the same period fell from 5.5% to 5.4%- its lowest rate since May 2008.
The rate is now close to the 5.0 to 5.2% range that the Federal Reserve regards consistent with full employment.
The positive jobs data improved market sentiment as it keeps the Federal Reserve on course for a rate hike later this year.
“It walks a very fine line in that it shows the economy is coming out of the first-quarter slump, evidenced by the good job gains,” Jim McDonald, chief investment strategist at Northern Trust, told the Wall Street Journal.
“But it’s also giving some confirmation that we’re not going to see inflation sooner than expected…You really couldn’t have written a better set of numbers to placate the markets.”
The Dow Jones Industrial Average added more than 252 points or 1.4% in early morning trading after report to trade at 18,176 points. All 30 major components of the Blue-chip index were higher for the day.
The S&P 500 Index jumped by 25 points or 1.3% to 2115 points with all 10 of its key sectors trading in the positive for the day.
The Technology heavy Nasdaq Composite climbed 65poiints or 1.3% to 5009 points.
The tech-heavy index was also aided by a 2.7% jump in Microsoft Inc to $47.95 a share after Reuters reported that the technology giant was currently not weighing making any offer for global cloud computing giant Salesgforce.com.
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