Upbeat Jobs Data Leads To Early Strength On Wall Street - U.S. Commentary

(RTTNews) - With traders reacting positively to the Labor Department's monthly jobs report, stocks have moved mostly higher in early trading on Friday. The major averages have all moved to the upside after ending the previous session mixed.

In recent trading, the major averages have moved roughly sideways, hovering in positive territory. The Dow is up 137.86 points or 0.8 percent at 18,489.91, the Nasdaq is up 51.55 points or 1 percent at 5,217.80 and the S&P 500 is up 13.35 points or 0.6 percent at 2,177.60.

The early strength on Wall Street comes following the release of a report from the Labor Department showing much stronger than expected job growth for the second straight month.

The Labor Department said non-farm payroll employment surged up by 255,000 jobs in July after jumping by an upwardly revised 292,000 jobs in June. Employment had been expected to increase by about 185,000 jobs.

The much stronger than expected job growth seen over the past two months came after employment edged up by just 24,000 jobs in May.

Even with the stronger than expected job growth, the unemployment rate held at 4.9 percent in July. The unemployment rate had been expected to edge down to 4.8 percent.

The unemployment rate held steady as the household survey measure of employment soared by 420,000 jobs, but the number of people in the labor force also shot up by 407,000.

The report also said average hourly employee earnings climbed by $0.08 or 0.3 percent to $25.69 in July, although the annual rate of growth was unchanged at 2.6 percent.

While the data points to strength in the labor market, analysts said the Federal Reserve remains unlikely to raise interest rates next month due in part to muted GDP growth.

"With the RBA in Australia and the Bank of England providing more monetary stimulus and Japan boosting its fiscal stimulus, we think a majority of Fed officials will be nervous about raising rates given the significant boost it could give the dollar," said ING economist James Knightley.

He added, "Instead, we think they will continue to tread cautiously with one rate hike in 1Q17 and a further one in the second half of next year."

A separate report from the Commerce Department showed that the U.S. trade deficit widened by more than expected in the month of June.

Financial stocks have shown a strong move to the upside on the heels of the monthly jobs data, with the NYSE Arca Broker/Dealer Index and the Dow Jones Banks Index jumping by 2.6 percent and 2.2 percent, respectively.

Electronic storage, networking, and transportation stocks are also seeing considerable strength, while gold and utilities stocks are bucking the uptrend.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. Hong Kong's Hang Seng Index surged up by 1.4 percent, while Japan's Nikkei 225 Index closed just below the unchanged line and China's Shanghai Composite Index edged down by 0.2 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the U.K.'s FTSE 100 Index has risen by 0.6 percent, the German DAX Index is up by 1.1 percent and the French CAC 40 Index is up by 1.3 percent.

In the bond market, treasuries have moved sharply lower on the heels of the upbeat jobs data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 6 basis points at 1.563 percent.