GLOBAL MARKETS-Stocks rally after U.S. jobs report; dollar slips

Fri Feb 7, 2014 3:08pm EST

* Investors shrug off disappointing jobs report, citing
weather impact
    * Unemployment rate falls to five-year low of 6.6 percent
    * Bond prices rise on the jobs report, economic softness
feared


    By Herbert Lash
    NEW YORK, Feb 7 (Reuters) - Global equity markets surged on
Friday as investors set aside any fear of economic softness in a
weak U.S. jobs report, while bond yields and the dollar fell as
the data showed employers hired far fewer workers than expected
in January.
    Non-farm payrolls rose by 113,000, well below the consensus
of 185,000, although the unemployment rate hit a five-year low
of 6.6 percent, the U.S. Labor Department said. 
    The dollar fell broadly as safe-haven gold and U.S.
government debt prices rose on the unemployment report. Equities
also rose, with investors writing off the weakest two months of
U.S. job growth in three years on inclement weather.
    The household survey from which the jobless rate is derived
also found strong gains in employment and an increase in the
number of people in the labor force, helping offset concerns
about a potential soft patch in the economy. 
    The proportion of working-age Americans with a job rose to
58.8 percent, the highest since October 2012.
    "Markets are increasingly behaving as though the recent
series of soft economic data is truly attributable to bad
weather, and not some broader downturn in demand," said David
Joy, chief market strategist at Ameriprise Financial in Boston.
    "It's unlikely that the economic momentum from late last
year simply stalled in December and January," Joy said.
    U.S. gross domestic product grew by the most in a decade in
the last half of 2013, the Commerce Department said last week.
    MSCI's all-country stock index rose 1.09
percent, and its gauge of emerging markets rose 0.89
percent. 
    The pan-European FTSEurofirst 300 index of leading
shares closed up 0.75 percent to 1,300.11, helped by steelmaker
Arcelor, as investors bet equities would continue to
benefit from the region's gradual economic rebound.
    Arcelor rose 0.81 percent to 12.495.
    On Wall Street, the Dow Jones industrial average rose
144.46 points, or 0.92 percent, to 15,772.99. The S&P 500 
gained 20.67 points, or 1.17 percent, to 1,794.1 and the Nasdaq
Composite added 63.331 points, or 1.56 percent, to
4,120.452.
    "Expectations for the report were too high, and investors
are giving the report the benefit of the doubt because of the
weather," said Donald Selkin, chief market strategist at
National Securities in New York.
    After the selloff earlier in the week, the fact equities are
rising after Thursday's gains shows there is still momentum to
the bull market, Selkin said.
    "Stocks initially got killed after the report came out, but
now we're pretty sharply higher. That's a strong sign that we've
bottomed out," he said.
    Though the labor market report called into question the
strength of the economy, the preponderance of most economic data
still shows some pretty good growth, said Anthony Valeri,  
investment strategist at LPL Financial in San Diego.
    "We're seeing earnings on track to grow about 9 percent
year-over-year, and as long as that's the case, the pullback in
stocks is likely to be limited," Valeri said. 
    "The data hasn't been weak enough to suggest that the
current earnings trajectory will deviate," he said. 
    Earnings have been holding up.
    Of the 343 companies in the S&P 500 that have reported
earnings to date for last year's fourth quarter, 67.9 percent
beat analyst expectations, Thomson Reuters data show. In a
typical quarter since 1994, 63 percent beat estimates.
    The dollar index fell 0.26 percent to 80.694, as the
euro gained 0.29 percent to 1.3628 against the greenback.
The dollar rose 0.24 percent to 102.33 against the yen.
    The benchmark 10-year U.S. Treasury note rose
7/32 in price, pushing its yield down to 2.6765 percent.
    German Bund futures settled up 50 ticks at 143.83,
retreating from earlier highs of 144.02, while cash 10-year
yields on government debt fell to 1.66 percent.
    Oil rose by more than $1 to one-month highs, fueled by a
sharp rally in gasoline and heating oil as supplies tightened
and refiners started to shut down plants for maintenance.
    Brent crude oil futures rose $2.20 to $109.39 a
barrel. U.S. crude settled up $2.04 to $99.88 a barrel.
    
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