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.

PROMOTED VIDEO
Life and Style
techYahoo Japan launches service to delete your files and email your relatives when you die
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
News
i100
Arts and Entertainment
<p><strong>2008</strong></p>
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>
filmRobert Downey Jr named Hollywood's highest paid actor for second year running
Life and Style
Dale Bolinger arranged to meet the girl via a fetish website
life
Property
Sign here, please: Magna Carta Island
propertyYours for a cool £4m
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Compliance Officer - CF10, CF11, Compliance Oversight, AML, FX

£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...

Trade Floor Support - Investment Bank - London - £350 per day

£300 - £350 per day: Harrington Starr: Our client a leading investment bank is...

Delivery Manager - Project Manager, Financial Services

£70000 - £80000 per annum + BONUS + BENEFITS: Harrington Starr: A multi award ...

Training Programme Manager (Learning and Development)-London

£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

Day In a Page

Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

Meet the people who play with Lego for a living

They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

20 best days out for the summer holidays

From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
Open-air theatres: If all the world is a stage, then everyone gets in on the act

All the wood’s a stage

Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
Rand Paul is a Republican with an eye on the world

Rupert Cornwell: A Republican with an eye on the world

Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
Self-preservation society: Pickles are moving from the side of your plate to become the star dish

Self-preservation society

Pickles are moving from the side of your plate to become the star dish
Generation gap opens a career sinkhole

Britons live ever longer, but still society persists in glorifying youth

We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor