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Petroleum industry

Stocks Surge on Strong US Jobs Data, Interest Rate Hopes

Strategic Insights

— 1 min read

The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite closed about 2 percent higher on Friday, with the S&P 500 index suffering its biggest daily drop since late September the previous day. The upside was driven by robust US jobs data, which suggested the economy is strong enough for the Federal Reserve to raise interest rates for the first time in nearly a decade. The jobs report showed that nonfarm payrolls increased 211,000 in November, beating expectations, while the unemployment rate remained at a 7-1/2-year low of 5 percent. Investors are now looking at a potential Fed tightening as a positive sign, with many expecting a rate hike in December.

Key Takeaways:

  • The Dow Jones Industrial Average closed about 2 percent higher on Friday, its biggest gain in three months, following strong US jobs data.
  • Nine of the 10 major S&P 500 sectors were higher, with the energy index being the only sector that declined due to news that OPEC countries failed to agree on oil production.
  • Nonfarm payrolls increased 211,000 in November, exceeding expectations, and the unemployment rate remained at a 7-1/2-year low of 5 percent.
  • Investors are now expecting a rate hike in December, with Fed funds futures contracts showing an 80 percent chance of a rate increase.
  • The Fed's policy-setting committee will meet on December 15-16 to discuss potential rate hikes.
  • Financials rallied, with 85 of the 87 stocks in the S&P Financials Index up, while JPMorgan Chase rose 2.3 percent after European antitrust regulators dropped charges against the bank.

Statistics:

  • The Dow Jones Industrial Average closed up 2 percent on Friday.
  • Nonfarm payrolls increased 211,000 in November.
  • The unemployment rate was at a 7-1/2-year low of 5 percent.
  • Fed funds futures contracts showed an 80 percent chance of a rate hike in December.
  • 85 of the 87 stocks in the S&P Financials Index were up.

Sources:

  • http://www.reuters.com/article/us-markets-stocks-idUSKBN0TN19520151204
  • http://www.ibtimes.com/us-economy-added-211000-jobs-november-unemployment-rate-stays-5-2210668
  • http://www.ibtimes.com/oil-prices-crude-drops-below-40-after-opec-members-agree-maintain-high-output-2211987

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