U.S. stocks regained some ground on Friday, with the Dow Jones industrial average closing up 60 points higher--a welcome interruption in a slide that has wiped $4.4 trillion from global equity markets in the past two weeks on fears of continued debt troubles in Europe and a slowing American economy.
Stocks had surged at the start of trading Friday morning –- with the Dow Jones industrial average climbing 170 points within minutes of the market's opening -- after July’s employment report came back with a higher-than-expected gain of 117,000 jobs last month. The Dow was fluctuating in early-afternoon trading, but ended up about 60 points higher at 11,444. (Click here for latest market information.)
The jobs report also revised May and June’s gains up by a total of 56,000 jobs, and the unemployment rate fell slightly to 9.1 percent -- two bright spots after an awful week of economic news. The report stated that 154,000 private-sector jobs were added, offset by continuing decline in state- and local-government jobs.
The Obama administration was clearly pleased with the report, which was better economic news than expected in the wake of a stream of bad data in recent weeks. “As I say every month, you never want to make too much of any one month's report because they are quite variable,” Council of Economic Advisors Chairman Austan Goolsbee said on MSNBC after the news came out. But, he added, “it was certainly an encouraging development that we were way above expectations.... Now we've taken heavy blows the first half of this year, but we got to grow our way -- we have a long way to go.
It was certainly a pleasant surprise for Goolsbee, who ends his stint at the White House on Friday and plans to return to the University of Chicago this fall to teach. But with an eye to the future, he took his last opportunity for public comment as an administration official to echo President Obama’s calls for Congress to pass a set of free-trade agreements, extend the payroll-tax cut, create an infrastructure bank, and send through a paten-reform bill to spur job growth.
The better-than-expected jobs numbers cap a tumultuous week for the economy. The Dow fell 512 points during Thursday trading -- the biggest tumble since October 2008 -- and the S&P 500 stock index and Nasdaq each fell by more than 3 percent. Asian markets tanked overnight, fueling a global sell-off that has wiped some $4.4 trillion from equity markets since July 26 and erased all the gains of the year in just two weeks.
The rally that followed Monday’s news that Obama and congressional leaders had finally reached an agreement on a deal to raise the debt ceiling and mildly cut the deficit was short-lived, quickly giving way to a weeklong slide as markets focused on the underlying weakness of the economy. Safe-haven assets such as Treasury bonds and gold climbed to record levels.
White House press secretary Jay Carney assured reporters at a Wednesday briefing that the United States isn’t facing a double-dip recession and that Tuesday’s debt-ceiling agreement would send a “reassuring message” to global markets.