Better-than-expected jobs report pushes stocks higher, feeds hopes for economic recovery
By Stephen Bernard, AP Business Writer

NEW YORK (AP) — Investors finally got some good news about unemployment.

Stocks rose Friday after the government’s July jobs report showed job losses were less than expected and the unemployment rate unexpectedly dipped.

In the latest sign the economy could be recovering, the Labor Department said companies shed 247,000 jobs in July. Economists had expected 320,000 job cuts.

The unemployment rate dropped to 9.4 percent from 9.5 percent in June. Economists forecast the rate would rise to 9.6 percent.

“It’s a pretty good jobs number, (and) certainly trending in the right direction,” said James Shelton, chief investment office at Kanaly Trust in Houston. “It’s not necessarily pointing to growth yet,” he added, but it shows deterioration in the economy is lessening.

Investors had been bidding up stocks in recent months amid signs the recession was easing and slowly beginning its recovery. While still showing the economy is not back to normal, the latest jobs data provides further indication of improvement.

In midmorning trading, the Dow Jones industrial average rose 51.62, or 0.6 percent, to 9,307.88. The Standard & Poor’s 500 index gained 6.31, or 0.6 percent, to 1,003.39, while the Nasdaq composite index rose 15.40, or 0.8 percent, to 1,988.56.

The jobs report showed other encouraging signs as well. Workers’ hours moved higher after sinking to a record low in June and paychecks grew after having fallen or flat-lined in some cases.

In corporate news, embattled insurer American International Group Inc. posted its first quarterly profit since 2007. The insurance giant, which is now majority owned by the government, reported a profit of $1.82 billion in the second quarter as some of its businesses stabilized.

The government has provided AIG with a loan package worth up to $182.5 billion and received an 80 percent stake in the firm after bailing it out at the peak of the credit crisis last fall.

Its shares jumped $2.64, or 11.7 percent, to $25.17.

Investors had been cautious this week ahead of the monthly unemployment report. Stocks jumped Monday on promising economic numbers but then held to only modest moves in the days that followed.

Analysts said the pause was in order because the Dow surged more than 13 percent in four weeks on better-than-expected earnings reports.

Meanwhile, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.84 percent from 3.76 percent late Thursday.

The dollar was mostly higher against other major currencies, while gold prices also rose.

Overseas markets also rallied on the U.S. jobs data. In afternoon trading, Britain’s FTSE 100 rose 0.6 percent, Germany’s DAX index gained 1.3 percent, and France’s CAC-40 rose 0.9 percent. Earlier Friday, Japan’s Nikkei stock average rose 0.2 percent.

source: Yahoo Finance>