Stocks posted strong gains as the July labor report was robust. Banks led markets higher as did tech and consumer stocks in a broad rally that saw the Dow post a 191 point gain to 18,543 on lower volume. The tech heavy NASDAQ also posted a nice gain but the trading volume for this index was higher indicating that growth stocks might be punching through resistance and assuming market leadership.
After two down weeks the Dow reversed earlier losses and closed at the upper end of its trading range gaining about a half a percentage point. The NASDAQ meanwhile gained 1.1% for the week and is in new high territory.
The July jobs report hit the wires just as people were lining up at the local Starbucks for a morning cup of Joe. The Labor Dept. said that 255,000 jobs were created in July which is way better than the 185k figure the gurus had projected. The unemployment level held steady at 4.9% in part due to a slight increase in the labor force participation rate. Hourly earnings rose 0.3% and the average length of the workweek increased as well. All In all it was a good report and the second in a row above 200k jobs. The rising wage component also boosts prospects for more consumer spending which in turn increases the odds that the Federal Reserve might increase rates by a quarter point sometime this year.
Gold and oil both fell as strength in the US dollar affected commodities. The US dollar was up a half a percentage point against a basket of 6 major currencies today. At the close WTI crude oil was off slightly at $41.88 per barrel while gold fell $26.40 per ounce to $1,341.