Last Friday, the Dow Jones Industrial Average closed at 13,076 points, finally topping 13,000 behind a late-week surge. Despite falling for the first four days this week, the Dow hit a three-month high today, up almost 250 points. The Dow popped 1.8% and the S&P 500
The employment news, surprisingly, saw a direct contradiction between the two measures used to judge the vitality of the labor market. Unemployment actually increased slightly to 8.3%, and yet businesses surged past expectations by adding 163,000 nonfarm payrolls.
What gives? The disparity is due to an increase in active job seekers, and the overall unemployment rate includes farmers, which have had a rough time lately in our most recent drought.
Investors cheered the unexpectedly high payroll rise, which could mean higher earnings for companies down the road. But most importantly, the labor market finally showed some signs of life, giving investors reason for optimism. The ISM Services index also pleased analysts, rising to 52.6 after hitting 52.1 in June. Anything above 50 signals expansion in the services industry.
Every single Dow component traded up this morning, led by Kraft Foods'
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