Dollar, Stocks Surge On Strong U.S. Jobs Data

The U.S. dollar surged against the yen and global equity markets rallied on Friday after the U.S. government reported surprisingly strong jobs growth for April that drove optimism on the economy, driving Wall Street stocks to record highs.

U.S. nonfarm payrolls rose by 165,000 last month and the jobless rate fell to a four-year low of 7.5 percent, the Labor Department said. Hiring was also much stronger than previously thought in the prior two months, all signs of a resilient jobs market.

Economists expected payrolls to rise by 145,000 and the unemployment rate to hold steady at 7.6 percent.

Leading U.S. and European equity indexes advanced about 1 percent in a rally that has boosted the S&P 500 index more than 5 percentage points from April lows in just 11 sessions. The U.S. benchmark is up more than 13 percent so far this year.

Both the S&P 500 and the Dow industrials topped key milestones for the first time, with the S&P 500 breaking through the 1,600 mark and the Dow briefly surpassing 15,000.

In a sign of the rally’s breadth, the Russell 2000 .RUT index of mid- and small-cap stocks hit an all-time high, and the Russell 1000 .RUI and Russell 3000 .RUA also set new highs.

Prices of crude oil, copper and other commodities also rallied as the jobs data raised investor confidence that demand is growing. Copper, a key industrial metal, surged more than 6 percent. Prices of government debt, a traditional safe haven, slumped on the data.

“The employment number was definitely the trigger for today’s rally,” said Michael Korn, president at Skokie Energy in Princeton, New Jersey.

The U.S. labor market has continued to be a source of concern, even as some sectors of the economy, such as the housing market, have shown clear signs of recovery.

The strong jobs data overshadowed an industry report that showed the pace of growth in the vast U.S. services sector slowed in April to its weakest pace in nine months.

The Dow Jones industrial average .DJI close up 142.38 points, or 0.96 percent, at 14,973.96. The Standard & Poor’s 500 Index .SPX rose 16.83 points, or 1.05 percent, at 1,614.42. The Nasdaq Composite Index .IXIC climbed 38.01 points, or 1.14 percent, at 3,378.63.

For the week, the Dow rose 1.8 percent, the S&P gained 2 percent, and the Nasdaq rose 3 percent in its biggest weekly climb since the first week of the year.

In Europe, the FTSEurofirst 300 .FTEU3 of leading shares rose 1 percent to 1,218.60, the highest close since June 2008.

MSCI’s all-country world equity index .MIWD00000PUS rose 0.81 percent to 370.90.

The dollar rose 1.1 percent against the yen, to 99.03 yen, on pace for its biggest one-day rise in two weeks, while the euro rebounded a day after the European Central Bank’s president, Mario Draghi, said the ECB was technically ready for negative deposit rates.

The euro was up 0.4 percent to $1.3115.

German Bund futures settled down 101 ticks at 146.15, while the benchmark 10-year U.S. Treasury note was down 1 3/32 in price to yield 1.7434 percent.

Brent crude settled $1.34 higher at $104.19 a barrel, while U.S. crude gained $1.62 to settle at $95.61 a barrel.

Benchmark copper on the London Metal Exchange closed at $7,265 per tonne, up from a close of $6,848 on Thursday. It rose more than 6 percent, its biggest daily rise since late October 2011, to hit an intraday high of $7,289 per tonne.

Gold traded near break-even, erasing early gains after the data on U.S. job growth, which reduced the need for the Federal Reserve to immediately boost monetary stimulus.

Spot gold rose $2.57 to $1,468.80 an ounce.

U.S. Comex gold futures for June delivery settled down $3.40 at $1,464.20 an ounce.

“The idea that employment is holding as well as it is in the face of the fiscal headwinds the economy is currently enduring is a very positive sign of the economy’s underlying fundamental improvements,” said Russell Price, a senior economist at Ameriprise Financial Services.

The better jobs data comes just a month after the Bank of Japan promised to inject about $1.4 trillion into the Japanese economy to spur growth and end decades of deflation.

By increasing liquidity, three of the world’s major central banks have fueled a rally in share and bond markets that has driven many benchmark indexes back up to levels last seen before the financial crisis began.

Reuters