The Dow Rose 301 Points Because U.S. Jobs Data Work Some Magic

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All three major stock indexes rallied Friday after October’s job numbers came much stronger than expected. Still, a manufacturing survey showed weakness in October.

The Dow Rose 301 Points Because U.S. Jobs Data Work Some Magic

All three major stock indexes rallied Friday after October’s job numbers came much stronger than expected. Still, a manufacturing survey showed weakness in October.

https://www.marketwatch.com/story/us-october-jobs-report-is-likely-to-be-a-big-dud-but-not-because-the-labor-market-is-tanking-2019-10-31?mod=article_inline https://www.marketwatch.com/story/us-manufacturers-still-suffering-from-china-trade-fight-tepid-global-economy-ism-finds-2019-11-01?mod=article_inline https://www.wsj.com/articles/defining-impeachment-down-11572563952 https://www.barrons.com/articles/what-the-perfect-jobs-report-means-51572627916 https://www.barrons.com/articles/what-the-perfect-jobs-report-means-51572627916 https://asset.barrons.com/dj-mg/dice/barrons-staffpicks-2d590600-c862-4394-b9d3-66b48c376d60/inset.json https://www.marketwatch.com/story/us-manufacturers-still-suffering-from-china-trade-fight-tepid-global-economy-ism-finds-2019-11-01?mod=article_inline mailto:evie.liu@barrons.com The Dow Rose 301 Points Because U.S. Jobs Data Work Some Magic By Evie Liu Illustration by Michael George Haddad The Dow Jones Industrial Average rallied on strong October job numbers.

Strong Hiring. All three major stock indexes rallied Friday after October’s job numbers came much stronger than expected. In fact, the S&P 500 and the Nasdaq Composite both set new intraday and closing highs. Still, a manufacturing survey showed weakness last month. Investors are getting a lot of updates from the Capitol Hill as well. House Speaker Nancy Pelosi said she expects the impeachment inquiry of President Donald Trump to begin public hearings this month, while the negotiation on the U.S.-Mexico-Canada Agreement might be getting close to the last mile and ready for a vote soon. In today’s After the Bell, we...

check on U.S. jobs data in October; explain why the fourth quarter will be key for gauging the American shoppers; review other October data that wasn’t so comforting.

A Perfect Jobs Report

Stocks jumped on Friday encouraged by a surprisingly strong job market in October. The Dow Jones Industrial Average rose 301.13 points, or 1.11%, to close at 27,347.36. The S&P 500 added 29.35 points, or 0.97%, to finish at 3066.91, and the Nasdaq Composite increased 94.04 points, or 1.13%, to close at 8386.40.

American economy added 128,000 jobs in October, trouncing expectations for only 85,000 jobs. Numbers for the prior two months were also revised up by a total of 95,000 combined. And don’t forget, the latest data come despite the 42,000 slide in auto-maker payrolls due to the strike at General Motors (ticker: GM) last month.

“Solid October jobs data shows the engine of the U.S. economy is humming along despite elevated global uncertainty, a good sign for growth as improving hiring conditions fuel consumer spending and confidence,” wrote Ryan Detrick, senior market strategist for LPL Financial, on Friday, “Payrolls growth has moderated this year, but we’ve also expected some slowing in hiring as the cycle ages and the labor market tightens further.”

Over the past 12 months, payrolls have grown an average of 175,000, around the average pace for this economic expansion. Unemployment ticked up a bit to 3.6% in October from 3.5% in September, largely in line with expectations and still near the cycle lows, while average hourly earnings grew by 0.2%, up from September’s flat reading.

“The jobs report echoes the better-than-expected news out of the Q3 GDP report, which showed the consumer continuing to drive economic growth forward,” wrote Jason Pride, chief investment officer of private wealth at Glenmede, “The consumer has been the lifeblood of the late stages of this economic expansion, and it appears households have gotten off on the right foot to begin the fourth quarter.”

https://asset.barrons.com/dj-mg/dice/barrons-staffpicks-2d590600-c862-4394-b9d3-66b48c376d60/inset.json

Pride noted that the fourth quarter will be an important bellwether for the health of the U.S. consumers, especially as shoppers embrace the coming holiday season.

“Though some tariffs have been delayed or taken off the table, the looming threat of newer tariffs later this year could disproportionately affect consumer-oriented goods more so than previous rounds have,” Pride wrote. “As a result, we are watching trends in consumer confidence and retail sales for signs that more expensive goods are keeping households’ spending gains on a leash.”

While a good jobs report could leave investors fairly optimistic, the ISM manufacturing index wasn’t so comforting in October. The 48.3 reading, although up from the previous month, missed the 49.0 estimate, as American factories continued to remain cautious with their investment plans due to the uncertain trade war outlook in the long run.

Write to Evie Liu at evie.liu@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.