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July 8th, 2013 |
Some stock investors may have extended their Independence Day celebrations an extra day last week as the monthly jobs report released Friday by the Labor Department indicated 195,000 new jobs were created in June, about 30,000 more than economists had expected, according to CNBC. Other positive economic data, including strong car sales and a rise in U.S. manufacturing activity, gave those who are bullish on the U.S. economy even more reason to rejoice. The S&P 500 finished the week 1.6 percent higher than where it began, while the NASDAQ added 2.2 percent, according to CNBC.
The official unemployment rate of 7.6 percent remained unchanged in June, according to the Bureau of Labor Statistics, but last Friday’s report sent stocks sizzling higher to close out last week. Alan Krueger, the Chairman of the White House Council of Economic Advisers, had this to say about the report, “The U.S. economy has now added private sector jobs for 40 consecutive months, and a total of 7.2 million jobs has been added over that period. So far this year, 1.23 million private sector jobs have been added.” At the same time, the yield on the 10-year U.S. Treasury bond reached 2.7 percent, the highest level since August 2011, according to Reuters. The yield on the 10-year Treasury has now increased by more than a full percentage point in less than two months as investors anticipate an improving economy to mean a reduction in Federal Reserve asset purchases is imminent.
June auto sales rose to a six year high, according to The New York Times, as nearly every auto maker posted better than expected results. Sales in the U.S. were 9.2 percent higher in June compared to last year, with 1.4 million vehicles being sold. Furthermore, the seasonally adjusted annual sales rate (SAAR) finished just under 16 million vehicles for the first time since 2007. Although pickup sales grew at a rate three times the pace of overall sales, according to RBC Capital Markets, other vehicle models such as smaller cars and compact SUVs, experienced solid gains as well.
After a temporary contraction of U.S. manufacturing activity in May of this year, the sector resumed growing in June, according to the latest Purchasing Managers Index (PMI) reading released by the Institute of Supply Management (ISM) last week. The report registered a PMI reading of 50.9 in June. Any reading above 50.0 indicates the U.S. manufacturing sector is expanding. According to Reuters, the consensus expectations were for the reading to come in at 50.5. The surprisingly strong reading gave investors reason to believe the 400 purchasing managers in the manufacturing industry who are surveyed are becoming more optimistic about the health of the U.S. economy, according to International Business Times.