U.S. Stocks Surge After Jobs Report Tops Expectations
08/03/2012| 10:18am US/Eastern
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By Matt Jarzemsky
NEW YORK--U.S. stocks opened higher, after falling four straight sessions, as domestic payrolls rose sharply more than expected.
The Dow Jones Industrial Average jumped 174 points, or 1.4%, to 13054 shortly after the opening bell.
Standard & Poor's 500-stock index climbed 19 points, or 1.4%, to 1384. Energy shares led gains across all 10 of the index's sectors. Kraft Foods paced gains among Dow components, rising 4.5% after reporting better-than-expected earnings.
The Nasdaq Composite Index advanced 38 points, or 1.3%, to 2948.
Knight Capital Group jumped 20% after a report said the embattled brokerage obtained a credit line that will allow it to operate for the day. The firm has scrambled to shore up its capital base after its systems suffered electronic-trading glitches Wednesday that will likely cost the company $440 million.
U.S. payrolls increased by a seasonally adjusted 163,000 jobs in July, the Labor Department reported in its broadest snapshot of the job market, topping economists' expectation for the addition of 95,000 workers. But the unemployment rate ticked up one-tenth of a percent to 8.3%, versus expectations for it to remain flat at 8.2%.
"It's somewhat of a rare ray of sunshine in an otherwise gloomy forecast," said Jim Dunigan, managing executive of investments at PNC Wealth Management, which oversees $110 billion in assets.
European markets were sharply higher, with the Stoxx Europe 600 climbing 1.7%, recovering from a selloff on Thursday that followed comments by European Central Bank President Mario Draghi.
Markets appeared to turn warm to plans being drawn up by the ECB to address the region's sovereign-debt crisis, including the purchase of short-dated debt. Yields on two-year Spanish and Italian bonds have fallen sharply, and the euro has rallied.
Spain's IBEX-35 index surged 3.9% after sliding 5.2% on Thursday.
In addition, euro-zone retail sales rose unexpectedly. The final composite purchasing managers' index edged up in July. The services PMI also increased.
Asian markets closed mostly lower on the back of Thursday's weakness in the U.S., with Japan's Nikkei Stock Average shedding 1.1% and Australia's S&P/ASX 200 giving up 1.1%. Meanwhile, China's Shanghai Composite rallied 1% on a reduction in stock fees and after China's central banks said it would make stabilizing economic growth a bigger priority.
Crude-oil futures rose 3.1% to $89.82 a barrel, while gold futures gained 0.4% to $1,596.70 an ounce. The U.S. dollar fell against the euro but rose versus the yen.
In the corporate arena, Procter & Gamble rose 2.1% after the blue-chip consumer-products company reported earnings that exceeded its expectations. The company said it would buy back $4 billion worth of common stock in the current year, offsetting a downbeat outlook for the current quarter.
Zipcar tumbled 35% after the car-rental company trimmed its revenue outlook for the year and said it brought in fewer new members than anticipated.
Write to Matt Jarzemsky at matthew.jarzemsky@dowjones.com
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