The encouraging July employment report for the US saw the Dow close at its highest level in more than nine months, as investors continued to bet the recession was over.
But the news of a smaller than forecast rise in jobless numbers and a drop in the unemployment rate saw bond yields rise to their highest levels since June, when they hit the highest levels so far in 2009.
And in a surprise move, the US dollar rose against most major currencies, sending many commodities lower.
Some economists thought the relatively better jobs numbers should have been bearish for the greenback.
Fewer than expected jobs – 247,000 – were lost last month and the unemployment rate actually fell, dropping 0.1% to 9.4%. The jobless figures for May and June were revised onwards, giving the impression of better conditions for the past three months, rather than just in July.
The working week edged up from an all-time low, while the rising length of the manufacturing week is now at its highest this year.
The car industry helped, with General Motors, Chrysler and other manufacturers rebuilding output and opening factories.
Government employment also rose, thanks to the stimulus spending.
But 422,000 people left the US labour force in the month and if the number of people in the labour force had remained unchanged from June, then unemployment would have risen to 9.7%.
However, the drop in labour force numbers in July mirrors a rise in the number of people looking for work earlier in the year, which then exaggerated the rise in unemployment
But there were also signs that many potential employees have given up looking for work.
Since January, the number of Americans who are either “part time of necessity”, “marginally attached” or in the “labour force reserve” – none of which are included in the official jobless statistics, but all of whom represent people seeking work and unable to get it – has grown by almost two million.
Taken together, the number of official and unofficial unemployed is now almost 30 million, according to the figures from the Bureau of Labour Statistics.
More than 33 million American men, women and children are receiving food aid from the various levels of government.
Don’t think the ‘good’ July figures send any sort of a message except the chances of a jobless recovery are not very high, with consumers unwilling (in fact, unable) to spend money on anything but the essentials of life, even if they have a job.
Keep that in mind when assessing the flow of figures and market reports for the next few months.
But Friday, the Dow rose 113.81 points, or 1.2%, to 9370.07, after being up as much as 181 points during the session.
For the week, the Dow rose 198.46 points, or 2.2%.
Nasdaq rose 27.09 points, or 1.4%, to 2000.25 on Friday and that helped it to gain 1.1% over the week.
The Standard & Poor’s 500 index hit the 1,000 point mark for the first time since last November, then retreated, but ended over it on Friday at 1010.48, up 1.3%.
For the week, the index advanced 23 points, or 2.3%.
Since the S&P 500 hit an intraday low of 667 on March 6, the index has jumped 52%. In just under the past month, it’s gained 15%.
For the year, the S&P 500 is up 12%.
The jobs figures saw yields on 10-year bonds rise 0.10% to 3.85%. They earlier reached 3.88%, the highest on a closing basis since June 10, when they closed at the highest rate this year.
Two-year-bond yields rose 0.09% to 1.29%, also after reaching their highest since early June.
Yields for both have been rising now for a month.
MarketWatch quoted Sam Stovall, chief investment strategist at Standard & Poor’s Equity Research, as saying that the S&P 500 would hit resistance when it tried to get beyond the 1,007 to 1,020 range.
"The S&P 500 is overbought from an intermediate-term standpoint," he wrote. "While we think the S&P 500 will take another stab to the upside, we think this will represent a topping phase."
In Europe the Dow Jones Stoxx 600 Index rose 1.2%, extending its weekly gain to 2.6% with the highest close since November 4. It’s up 46% since March 9.
German industrial production unexpectedly declined in June after increasing the most in more than 18 years In May. German orders and exports however were higher.
National benchmark indexes rose in 15 of the 18 western European markets. France’s CAC 40 added 1.3% and Germany’s DAX 1.7%.
London’s Footsie added 0.9% Friday after the US jobs figures were released, after being down 1.2% in early trading.
The Dax rose 2.4% over the week. The Footsie was up 2.7%, its fourth straight weekly rise.
Meanwhile Warren Buffett’s Berkshire Hathaway reported higher and lower second quarter profits.
Earnings from all sources rose 14% from a rebound in the value of its derivatives exposures and large equity investments.
Berkshire said second-quarter net income came in at $US3.3 billion, against $US2.88 billion, in the same quarter of 2008.
But operating earnings, which excludes investment and derivatives gains and losses, were $US1.78 billion, down from $US2.27 billion a year earlier.
The stock market rallied strongly during the second quarter; with the Standard & Poor’s 500 index up more than 15%.
That boosted the value of some of Berkshire’s large equity investments.
Shares of Wells Fargo and American Express, two large Berkshire hol
