Stocks edged higher in early Friday trading as investors reacted to an unexpectedly strong October jobs report.
Investors are still cautious because Friday’s jobs numbers and Thursday’s surprisingly strong report on U.S. economic growth could be the evidence the Federal Reserve needs to start pulling back on its economic stimulus.
The Standard & Poor’s 500 index was up three points, or 0.2 percent, to 1,750 in the first 30 minutes of trading.
The Dow Jones industrial average was up 12 points, or 0.1 percent, to 15,604. The Nasdaq composite rose 22 points, or 0.6 percent, to 3,879.
U.S. employers added 204,000 jobs in October, an unexpected burst of hiring during a month in which the federal government was partially shut down for half the month. The unemployment rate rose to 7.3 percent from 7.2 percent.
The report was much stronger than economists were expecting. They were forecasting that 130,000 jobs were created, according to FactSet.
It was the second piece of unexpectedly robust economic news that Wall Street received in the past two days. The Commerce Department said Thursday that the U.S. economy grew at a 2.8 percent annualized rate in the third quarter, better than the 2.5 percent rate economists were looking for.
The Federal Reserve has been buying $85 billion worth of bonds each month since December in an effort to keep interest rates low and boost the economy. Due to the design of the program, the Fed’s actions have had a secondary effect of driving up stock prices by making bonds look expensive by comparison.
Some investors believe that the Fed now has enough evidence that the U.S. economy is going better to start pulling back its stimulus program as early as its December meeting.
“It’s a close call, but these numbers point to the Fed (pulling back) in December or in January,” said David Kelly, chief global strategist at JPMorgan Funds, which oversees about $400 billion in assets.
Courtesy of Los Angeles Times