US stocks were mixed on Friday after November payrolls came in stronger than expected, raising expectations an interest rate hike from the Federal Reserve might come sooner than expected.
Payrolls were at 321,00 for November, significantly higher than the estimated 230,000 and the unemployment rate stood steady at 5.8%.
The US dollar has gained strength across the board and short-term interest-rate futures traders were pricing in the first Fed rate hike for July 2015.
Reuters quoted Brian Jacobsen, chief portfolio strategist at Wells Fargo Finds Management as having said, “We might see a situation where the Fed achieves its full employment target well before it achieves its inflation target. People are trying to see how the Fed will navigate that situation.”
He added, “Will they allow unemployment rate to drop significantly lower or will they worry about the economy overheating? That’s why we see equity futures all over the place.”
According to The Wall Street Journal, the Dow Jones Industrial Average added 0.5% or 87 points to 17,987 and the S&P 500 gained 0.3% or seven points to 2,079. The Nasdaq Composite Index climbed 0.3% or 15 points to 4,785.
Head of America’s single-stock trading at Deutsche Bank, Joe Spinelli said, “The strong labor report, on the heels of the strong GDP numbers that we’ve seen lately in the US is validating this robust economic environment. That is increasing people’s conviction that the market should rally into year-end.”
According to Kate Warne, Edward Jones investment strategist, the jobs report has reinforced the case for stocks going higher. She said, “More jobs mean more consumer spending. That means better overall growth and earnings, which is good news for stocks.”
The benchmark 10-year note yield climbed to 2.325%. Before the release of the report, the note was yielding 2.26%. When the bond yields rise, prices drop.
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