Dollar jumps, stocks hold gains on U.S. jobs data

By Herbert Lash

NEW YORK (BestGrowthStock) – The dollar soared and stocks posted modest gains on Friday after better-than-expected U.S. jobs data fueled hopes of faster economic recovery.

News that nonfarm payrolls rose by 151,000 in October — more than double the expected increase — supported the gains seen in stock markets during the past two sessions, after the Federal Reserve announced a second round of monetary stimulus.

Nikkei futures traded in Chicago were up 115 points to 9,600 points.

The U.S. dollar rallied against the euro and yen on the jobs data, which showed private companies hired workers at the fastest pace since April.

The dollar rose versus a basket of major currencies, with the U.S. Dollar Index (.DXY: ) up 0.96 percent.

Crude oil hit a two-year high above $87 a barrel before turning lower while gold hit a fresh record above $1,397 an ounce, also before paring its gains. Investors bought gold on fears the Fed’s move announced Wednesday to buy more government bonds will spur inflation and weaken the dollar going forward.

The strong U.S. labor report helped copper flirt with record highs as it raised confidence in the prospects for increased demand in the world’s largest economy.

Analysts had forecast a gain of 60,000 jobs in October, according to a Reuters poll. But the U.S. unemployment rate remained unchanged from the previous month at 9.6 percent, a reminder that stronger jobs growth was needed.

“It’s both better than people had been looking for, and it’s another nail in the coffin of a double dip,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, referring to fears the economy would slide back into recession.

However, the data was “still within the realm of a moderate recovery,” Gault said, a view that seemed to be reflected on Wall Street, where markets hovered near break-even, in contrast to better gains in Europe and elsewhere.

MSCI’s all-country world stock index (.MIWD00000PUS: ) rose 0.15 percent while the FTSEurofirst 300 (.FTEU3: ) index of leading European shares advanced 0.38 percent to 1,111.28.

Miners ranked among Europe’s best performers as metal prices rallied sharply, with Shanghai zinc jumping 5 percent and London copper rising to fresh 27-month highs, within $200 of a fresh record. Copper rose to $8,655.00 per tonne.

U.S. stocks (Read more about the stock market today. ) hovered near break-even as investors mulled a recent advance that had pushed the benchmark Dow Industrials and S&P 500 to their highest levels since September 2008, when markets posted their deepest slide since World War II.

The Dow Jones industrial average (.DJI: ) closed up 9.24 points, or 0.08 percent, to 11,444.08, while the Standard & Poor’s 500 Index (.SPX: ) rose 4.79 points, or 0.39 percent, to 1,225.85. The Nasdaq Composite Index (.IXIC: ) edged up 1.64 points, or 0.06 percent, to 2,578.98.

“Markets got a little boost from the jobs report, but the strengthening dollar is offsetting. In addition, the markets have been up all week and may be running into a little profit-taking,” said Tom Bentz, broker at BNP Paribas Commodity Futures Inc in New York.

Markets jumped earlier in the week on the Fed’s decision to pump an additional $600 billion into the U.S. economy through government bond purchases in hopes of pushing interest rates down further and stimulating demand.

While the jobs report will help bolster so-called risk markets and push oil prices higher, investors want to see sustainable gains in unemployment, said Mohamed El-Erian, who helps oversee more than $1.1 trillion as co-chief investment officer at Pacific Investment Management Co, or PIMCO.

“The longer-term impact will depend on the strength of the all-important hand-off to permanent sources of employment growth,” El-Erian said.

Spot gold hit a fresh record of $1,397.80 an ounce, before paring much of that gain. Gold was up $1.10 at $1,393.30.

U.S. crude futures rose 36 cents to $86.85 a barrel, having touched $87.22 earlier, the highest intraday price since October 2008.

The euro was down 1.20 percent at $1.4027. Against the Japanese yen, the dollar was up 0.67 percent at 81.25.

U.S. Treasury debt prices fell, driving the 30-year bond’s yield to its highest level since June, as the jobs data erased the safe-haven appeal of government debt.

The 30-year U.S. Treasury bond slid 1 point in price to yield 4.123 percent. The benchmark 10-year U.S. Treasury note fell 14/32 in price to yield 2.5394 percent.

(Reporting by Rodrigo Campos, Gertrude Chavez-Dreyfuss, Jennifer Ablan and Ellen Freilich in New York, Ikuko Kurahone, Brian Gorman Dominic Lau in London; Writing by Herbert Lash; Editing by Jan Paschal and Andrew Hay)

Dollar jumps, stocks hold gains on U.S. jobs data