June 5

U.S. Stock Markets Erase Brexit-Triggered Losses on Strong Jobs Data

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The stock markets in the United States recovered losses triggered by the Brexit vote on Friday on strong jobs data for the month of June. In fact, the American economy recorded its highest job gains in eight months last month.

The Department of Labor reported that the U.S. economy added 287,000 jobs in June and the unemployment rate is 4.9%. Economists expected 175,000 jobs and the 4.8% unemployment rate. A reading below 5% indicates full employment.

A remarkable recovery from the greatest economic depression

In a statement, Labor Secretary Thomas E. Perez said the jobs data showed that the country’s economy is resilient and strong. He noted, “American businesses added 14.8 million jobs since February 2010, a remarkable recovery from the greatest economic depression of our lifetime.” The unemployment rate declined below 5% from 10% at the height of the recession and the unemployment insurance claims have been below 300,000 over for 70 weeks, the longest streak since 1973.

“Though today’s report confirms that our economy is resilient and strong, we still have more work to do to ensure that the prosperity we have created is broadly shared. We can start with two measures that Congress has so far refused to take up: raising the federal minimum wage and guaranteeing access to paid sick and parental leave,” said Secretary Perez.

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The Fed and markets are focused on jobs data

The global markets suffered a two-day selloff following the Brexit vote last month. Investors were concerned that Britain’s decision to leave the European Union (EU) may have a negative impact to the global economic growth.

Today, the Dow Jones Industrial Average (DJIA) climbed 1.26% to 18,121.01 points and the S&P 500 rose 1.34% to 2,126 points. The NASDAQ gained 1.47% to 4,948.63 points and the Russell 2000 went up 2.32% to 1,176.39 points around 1:28 in the afternoon in New York.

In an interview with Bloomberg, Tom Anderson, the chief investment officer at Boston Private Wealth, commented, “This data is obviously from before the Brexit vote primarily and suggests the U.S. economy is still in good shape and continues the power forward. It’s encouraging and what U.S. investors are looking for.”

On the other hand, Tony Bedikia, managing director of global markets at Citizens Bank in Boston, said the Fed and the markets are really focused on the current jobs data to see if the previous number was just an aberration or the beginning of a trend.

In May, the U.S. economy added 38,000 jobs, significantly lower than the 162,000 jobs expected by economists. The jobs growth was negatively impacted by several factors such as the temporary strike in the telecommunications industry particularly by more than 35,000 workers from Verizon.

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Bedikia said the jobs data in June is “positive and broad-based and should be viewed positively by the market and the Fed in general. It looks like we have a risk-on trade that could continue.”

Stock market movers

The stock price of Smith & Wesson Holding Corp (NASDAQ:SWHC) and Sturm, Ruger & Company (NYSE:RGR) increased as investors expected higher sales for the gun makers due to concerns of potential gun control policies after the worst mass shooting of police in the history of the United States.

The shares of Smith & Wesson increased more than 3% to $29.23 each while Sturm, Ruger & Company gained almost 5% to $67.68 a piece.

The stock price of Facebook (NASDAQ:FB) is up by 1% to 117.08 per share despite the report that IRS is investigating its asset transfer to its subsidiary in Ireland in 2010. The social network giant was reportedly testing a new security feature called Secret Conversations on Messenger.

Juno Therapeutics (NASDAQ:JUNO) plummeted nearly 30% to $28.63 per share. The U.S. Food and Drug Administration (FDA) halted its Phase II clinical trial of its cancer treatment (JCAR015) in adult patients with relapsed or refractory B cell acute lymphoblastic leukemia (r/rALL) after the death of two patients last week.


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