Dow Jones breaks through 17,000 barrier on back of surging US job figures

 

Economics Editor

The Dow Jones Industrial Average burst through 17,000 for the first time yesterday following a report showing the American economy added 288,000 more jobs in June.

Another equity benchmark, the S&P 500, was also up, rising just shy of 2,000 in the wake of the report, which showed the US unemployment rate dipping to 6.1 per cent of the workforce.

The surging index of top shares in the world's largest economy was said to reflect the confidence of traders that the US is recovering fast after bad weather prompted a GDP contraction in the first quarter of the year.

"It's an extremely bullish report. It's a report that really checks off all the positive boxes. I don't think you could have asked for a stronger read" said Jacob Oubina of RBC Capital Markets in New York.

"The overall improvement in the labour market suggests the weak first quarter GDP figures that were released in June were a blip in the underlying trend," said Danae Kyriakopoulou, of the Centre for Economics and Business Research.

MSCI's all-country index, which covers 85 per cent of potential global equity investments, also hit a record high after rising 0.22 per cent.

The FTSE 100 rose for a third day in succesion, closing 0.7 per cent higher at 6,865 while European shares were helped by comments from Mario Draghi, who said the European Central Bank was prepared to engage in asset purchases to lift inflation in the eurozone. The ECB's council voted to keep its interest rates in negative territory.

The US economy has added an average of 231,000 jobs per month this year, the highest six-month average since 2006. In June there was a drop in the number of Americans who have been out of work for at least 27 weeks, which at 3.1 million was the smallest figure since February 2009.

JP Morgan brought forward its forecast for the first rate increase from the Fed- eral Reserve from the final quarter of 2015 to the third quarter and the dollar gained rose against other currencies, reflecting shifting expectations over the timing of monetary tightening.

"Markets are torn between the good economic news and the risk this entails for a super accommodative Federal Reserve" said Mohamed El-Erian, chief economic adviser at Allianz SE. "If this robust June jobs report is repeated in the months ahead the Federal Reserve would do more than completely exit its asset purchase program. It would also have to accelerate its interest rate hikes".

Concerns have been growing that low interest rates have encouraged investors to misprice credit risk. The Bank of International Settlements this week suggested central banks should consider withdrawing exceptional levels of monetary stimulus for this very reason.

However, the chair of the Federal Reserve, Janet Yellen, refused that advice in a speech this week at the International Monetary Fund in Washington. "I do not presently see a need for monetary policy to deviate from a primary focus on attaining price stability and maximum employment in order to address financial stability concerns" she said.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future