Dow Industrials Jump 200 Points, Retake 17,000 as Jobs Data Drives Stocks Higher

For one day at least we can stop worrying about whether a slowing economy will derail the stock market, as U.S. payrolls jumped in September.

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The Dow Jones Industrials have jumped 203.36 points, or 1.2%, to 17,004.41 at 12:44 p.m., while the S&P 500 has risen 1.2 % to 1,9629.18. The Nasdaq Composite has climbed 1.2% to 4,484.34 and the small-company Russell 2000 has gained 1.1% to 1,108.90.

The U.S. added 248,000 jobs in September, well above forecasts for 215,000, while the August number was revised higher to 180,000 from 142,000. The unemployment rate, meanwhile, fell to 5.9%, the lowest since 2008. Wages, however, was unchanged from the previous month. JPMorgan’s David Lebovitz can’t contain his excitement:

BOOM! Goes the jobs report…After a week full of market volatility and concerns over the state of the U.S. economy, today's jobs report served as a reminder that the U.S. economic expansion continues…Overall, today's report should be a positive for equities and somewhat of a mixed bag for bonds. As long as wage growth remains subdued, corporate profits should be able to continue their upward ascent, justifying slightly higher valuations in the equity market. However, if this trend of improvement in the labor market continues, it may push the Fed to raise interest rates sooner rather than later, even in the absence of higher wages.

 

ISI Group’s Dennis DeNusschere notes that the market is increasingly data driven:

The better than expected payroll data is helping push risk higher today. As we noted in the Early Thought today, given the recent fears on the growth/disinflation side, better than expected and the oversold condition were likely to have a larger than normal impact on equities. Positive economic news is a positive for the market.  That being said, inflation expectations remain near the lows despite the improved data and although small caps are leading today, we would like to see inflation expectations move higher before we get excited about hitting, or moving through, our 2050 S&P call for this year. With inflation expectations remaining near the lows, our 2050 target would still look like a stretch. The recent European rally off the lows has faded as European inflation expectations have remained near the lows.

In other words, it’s OK to be excited. Just don’t get too excited.