Stocks edge higher after June jobs report beats expectations
NEW YORK -- Investors don’t seem too impressed with good news.
After an initial sharp rise, stocks barely edged higher in early trading Friday following the U.S. Department of Labor’s report that the economy added 195,000 jobs in June, higher than economists had predicted.
The Dow Jones industrial average was nearly flat shortly after the opening bell, at 14,990.33 points.
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The broader Standard & Poor’s 500 index edged up 1.75 points, or 0.11%, to 1,617.16. The Nasdaq composite index rose 3.55 points, or 0.1%, to 3,447.22.
Market experts said Friday’s report seemed to bolster expectations that the Federal Reserve in coming months will begin scaling back its massive stimulus that has fueled this year’s stock market rally.
“This report confirms that the labor market continues to heal, and is generally consistent with the pattern of the past 12 months: a modest acceleration in the pace of job creation,” Russ Koesterich, global chief investment strategist with BlackRock, said in a statement.
Still, the stock market’s opening was much more muted than futures had implied before the opening bell.
“The market is obsessed with tapering” of the Fed’s bond-buying, said Jeffrey Cleveland, senior economist at the investment firm Payden & Rygel in Los Angeles.
The Fed’s stimulus, known as quantitative easing, has been pumping $85 billion a month into the economy. By buying bonds, the central bank has pushed down interest rates and thus made riskier investments like stocks more attractive.
Some have likened the market’s dependence to a drug addiction. That can lead to what Cleveland calls a sometimes perverse reaction in the stock market whenever good news could lead to the Fed tightening its spigot of easy money.
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“If the Fed tapers, that’s a good thing because that means the economy is healing,” Cleveland said. “There shouldn’t be this fearful cloud hanging over market.”
Bond investors apparently took Friday’s jobs report as a sign of rising rates. The yield on the benchmark 10-year Treasury bond, which has spiked in recent weeks, continued inching higher Friday. The 10-year’s yield was hovering just below 2.7% in early trading.
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