Wall Street opens higher as investors cheer US jobs data

A trader walks out of the New York Stock Exchange on Wall Street on June 24, 2016, in New York City.
A trader walks out of the New York Stock Exchange on Wall Street on June 24, 2016, in New York City. PHOTO: AFP

WASHINGTON (REUTERS) - Wall Street was higher on Friday (July 8) after data showed that the US economy posted its largest job gains in eight months in June, strongly rebounding from dismal numbers in May.

The economy added 287,000 jobs in the public and private sectors in June, compared with the 175,000 expected by economists. The payroll count for May was revised down to 11,000 from the previously reported 38,000.

The robust data confirms the sentiment that the May report was an aberration and not indicative of weakness in the labour market.

Unemployment in June rose to 4.9 per cent, compared with the estimate of 4.8 per cent. A reading below 5 per cent indicates full employment. "It looks like the markets are heaving a big sigh of relief here in that it wasn't a continued weakness that would concern the market of a broader economic slowdown," said Michael Arone, chief investment strategist, State Street Global Advisors in Boston.

The data, collected a week before Britain voted on its European Union membership, will feed into the US Federal Reserve's plans on rate hikes but traders do not expect the central bank to move anytime soon.

Financial stocks soared following the data. JPMorgan , Wells Fargo and Bank of America rose more than 1 per cent, and were the top influences on the S&P 500.

"In our opinion the Fed is on hold for all of 2016. This affirms the economy is still on decent footing but it doesn't change the Fed's path," said Darrell Cronk, chief investment officer at Wells Fargo Wealth And Investment Management in New York.

The Fed next meets on July 26-27. Traders are pricing in a mere 22.8 per cent chance of a rate hike in December, according to CME Group's FedWatch tool.

At 9.39am EDT (9.39pm Singapore time), the Dow Jones industrial average was up 123.1 points, or 0.69 per cent, at 18,018.98, the S&P 500 was up 14.36 points, or 0.68 per cent, at 2,112.26 and the Nasdaq Composite was up 32.04 points, or 0.66 per cent, at 4,908.85.

Eight of the 10 major S&P indexes were higher, led by a 1.44 per cent rise in the financials sector.

Crude prices bounced back from two-month lows hit in the previous session, but benchmark Brent was set for its largest weekly decline since January as bearish economic indicators weighed on oil.