National & World News

Stocks pop on jobs report

NEW YORK (CNNMoney) — Good news may finally be good news.

All three major U.S. stock indexes bounced back from four days of losses Friday as investors cheered a better-than expected November jobs report.

The Dow Jones Industrial Average jumped more than 100 points, while the S&P 500 and Nasdaq moved markedly higher.

The Labor Department said the economy added 203,000 jobs in November, higher than the 183,000 estimated by economists surveyed by CNNMoney.com. The unemployment rate dropped to 7.0% from 7.3%. It was expected to fall to 7.2%.

For months, investors have been sweating the Federal Reserve, trying to calculate when it will scale back, or taper, its massive $85 billion per month stimulus program. The Fed has said that improvement in the job market was one of the main things it was looking for before it would start trimming its bond purchases.

The bond market seems to be betting that the Fed may taper sooner rather than later. The yield on the 10-year Treasury note rose Friday to 2.87%, and is closing in on its 2013 high of near 3%. Bond yields rise when prices fall. So investors may be selling bonds because they expect the Fed to start slowing down its monthly Treasury purchases.

But there’s no consensus for when the taper will come to fruition.

“US Jobs Stronger than Expected, but not Enough for Fed to Taper,” was the title of a note from Brown Brothers Harriman.

“US payrolls strength boosts QE3 taper chances” was another from Capital Economics.

The Fed’s next policy meeting wraps up on December 18. It is the second-to-last meeting that will be led by Fed chair Ben Bernanke. He will likely be replaced by current vice chair Janet Yellen, who has been nominated by President Obama to be the next Fed chair and is merely awaiting approval from the Senate.

Many economic experts and investment strategists believe that Bernanke would prefer to have Yellen be in charge of the Fed’s tapering as opposed to him starting it just before his term expires.

U.S. stocks fell Thursday after good news on the health of the economy had investors worrying about when the Fed would taper.

European markets moved higher in afternoon trading on the heels of the U.S. jobs report while Asian markets, which closed before the jobs report was released, ended mixed.

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