Wall Street thankful for jobs report after turbulent week
Wall Street, after the worst week in years, heard one good piece of news. Friday's jobs report proved better than expected.
U.S. job market beat expectations and the stock market managed a modest gain — not great, but good enough after a turbulent week.Skip to next paragraph
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America added 117,000 jobs in July, the government said Friday — far from what happens in a healthy economy, and only good for a reduction of one notch in the unemployment rate, to 9.1 percent.
But the jobs number beat the forecast of economists, who were expecting no more than 90,000. And it was an overwhelming relief for investors, who just lived through two of the most brutal weeks in Wall Street history.
But when they come back on Monday, investors will have to absorb another body blow: Late Friday, ratings agency Standard & Poor's downgraded the United States' debt for the first time, saying the government's debt-reduction plans fall short. The downgrade could lead to higher interest rates and further hamper the economic recovery.
The Dow Jones industrial average finished Friday with a gain of 60.93 points and closed at 11,444.61. It made up only a small fraction of the losses from Thursday, when the Dow dropped 512, its worst since the financial crisis of 2008.
Friday was not exactly quiet for the market, either.
At the start of trading, investors were thrilled with the unemployment report, and the Dow rose 171. Ten minutes later, the gains were gone. Investors focused on Europe, which is struggling to keep Italy and Spain from being consumed by a growing financial crisis, and the Dow fell 243.
"The fear was that they had no plan to deal with the situation," said Randy Warren, chief investment officer at Warren Financial Service.
Later in the day, Italy promised to work toward a constitutional amendment to balance its budget. It was trying to calm investors around the world, who are worried that financial problems are spreading in Europe.
The Dow's gain was only its second in the past 11 trading sessions. The average has lost about 10 percent of its value in that time. The Standard & Poor's 500, a broader measure of the market, finished just under 1,200, down a fraction of a point.