Dow Jones Closes Higher After Surprise Jobs Growth

On Friday, the Dow Jones Industrial Average closed triple-digits after a better than expected jobs report. This most surely puts the U.S. as a safe haven for investors amid global problems such as oil and the Brexit turnover. The dollar held steady after the jobs report, and the fact that it didn’t trade higher was quite bullish for the U.S. stock market.The Dow Jones Industrial Average closed higher by 1.4% to 18.146.74. The Nasdaq closed up by 1.64% to 4,956.76, and the S&P managed to close higher by 1.53% to 2,129.90.

Jobs Number Impresses

Payroll numbers in the U.S. rose by 287,000, reported by the Labor Department for the month of June. The increase in the payroll numbers was quite a shock to many investors. That is because the last two months has seen tepid jobs growth, and the number reported on Friday had not been seen since October. In addition, analysts were only expecting the payroll number to rise by 180,000. Clearly this was a large beat, and it is bullish for the U.S. markets. The new jobs number surely helped improve the overall outlook of the U.S. economy. It even caused the unemployment rate to remain at 4.9%, as there was an increase in the amount of people entering the labor force. As long as the job growth the following months mimics this most recent jobs report, then the U.S. economy is on track for growth. The improvement in the jobs report most definitely had an impact on the Dow trading higher. This can especially be correlated to the fact that the Fed may pull back the brakes even more on raising interest rates. When the Fed announces a dovish position on interest rates, it causes the Dow to trade higher. This is because stocks are better investment vehicles when interest rates are kept the same.

Dollar Remains Steady

The dollar remained steady as soon as the jobs report was announced. It may have traded around most of the day, but for the most part it remained steady. The dollar holding its ground allowed the Dow Jones to trade higher for the session. That is because there has always existed a correlation between the dollar and the stock market. Whenever the dollar stays steady or falls, the Dow Jones tends to trade higher. Only when the dollar soars to higher levels, does it somehow halt the progress of the Dow from trading higher. The Euro/Dollar currency pair traded at $1.105 on Friday, and this is impressive considering that Brexit only happened a few weeks ago. The dollar yen currency pair hovered around 100.545, because the yen has been decreasing against the dollar over the past week. As long as the dollar remains steady, the Dow should trade higher.

Oil Trades Mixed

Oil was as high as 1% when the jobs number was announced, but ended up closing slightly lower. U.S. crude oil closed up by 0.6% higher to $45.41 a barrel. Brent Crude oil closed higher by 0.6% to $46.69 a barrel. Oil trading slightly higher was another contributing factor for the Dow holding its lead the entire session. Oil has been having a major problem the past few years. With this notion, whenever oil trades higher it has had a positive reaction for the Dow trading higher as well. The price of oil didn’t achieve remarkable gains, but it had made some nice gains nonetheless. The factor for the price of oil being capped was due to worries about supply. Data from Baker Hughes showed that the amount of rigs in the U.S. increased by 10 to 351 for the week. A rise in the amount of rigs is not bullish for the price of oil at all. It indicates that there is a large increase in supply on its way, and with demand faltering from a sluggish global economy it doesn’t help at all.