U.S. Stocks Surge to Three-Month High After Jobs Data
08/03/2012| 12:44pm US/Eastern
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--Stocks rise after closely watched July jobs report
--Europe rebounds sharply as investors reassess ECB comments
--Nonfarm payrolls top expectations; unemployment unexpectedly increases
By Matt Jarzemsky
NEW YORK--U.S. stocks snapped a four-session losing streak and jumped to a three-month high after the domestic economy added more jobs than expected in July.
The Dow Jones Industrial Average climbed 252 points, or 2%, to 13131 in midday trading, its highest level since early May. Stocks had fallen the past four sessions as U.S. and European central bankers' responses to economic sluggishness have underwhelmed investors.
The Standard & Poor's 500-stock index climbed 28 points, or 2.1%, to 1393. Financial and energy shares paced gains across all of the index's 10 sectors.
Kraft Foods rose 4.1%, leading the Dow higher. Fellow blue-chip Procter & Gamble added 3.7%. Both companies reported better-than-expected earnings.
The Nasdaq Composite Index advanced 62 points, or 2.1%, to 2972.
Knight Capital Group surged 28%. The stock had plunged 75% over the previous two sessions after a software glitch caused it to make erratic trades in 148 stocks. Knight has said the error, which has the brokerage firm struggling to stay afloat, will likely cost it $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 positions.
But the unemployment rate--obtained in a separate survey--rose one-tenth of a percentage point 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. "It's still hard to see where the momentum in the economy is. We had a sort of mixed report, with the employment higher than expected but the unemployment rate climbing a little bit."
Service-sector activity expanded at a slightly faster pace in July than a month earlier, according to the Institute for Supply Management, bucking economists' expectations for the group's nonmanufacturing index to show slowing expansion.
"It's somewhat encouraging that the market's reacting positively to this. Perhaps the hype about people only buying because of QE hopes is a little bit overblown," said Joe Bell, senior equity analyst at Schaeffer's Investment Research, referring to central-bank efforts to stir the economy with measures such as "quantitative easing."
European stocks traded sharply higher, helped by the U.S. data, with the Stoxx Europe 600 up 2.4%. Spain's IBEX jumped 6%.
Crude-oil futures jumped 4.6% to $91.14 a barrel. Gold futures added 1% to $1,606.40 a troy ounce. The dollar fell against the euro but rose versus the yen.
In other corporate news, shares of Zipcar tumbled 34% after the car-rental company trimmed its revenue outlook for the year and said it brought in fewer new members than anticipated.
LinkedIn advanced 13% after the professional networking site raised its revenue forecast for the year.
Medical-device designer Globus Medical jumped 17% on its first day of trading. The company's initial public offering on the New York Stock Exchange priced at the low end of its recently reduced target range. Business-software maker Eloqua, the other company to debut this week, rose 11%, adding to the 12% gain it posted after shares started trading Thursday.
Molycorp fell 26% after the rare-earth mining company posted an unexpected quarterly loss, citing soaring expenses.
Facebook, which had fallen to an all-time low Thursday after disclosing additional details about its user base, rebounded 5.4%.
Write to Matt Jarzemsky at matthew.jarzemsky@dowjones.com.
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