Wall Street Jumps as Data Boost Fed Optimism


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U.S. equity markets climbed on Tuesday as traders took tepid jobs data as an indication the Fed probably won't star easing off the accelerator in the near future.

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The Dow Jones Industrial Average climbed 75.5 points, or 0.49%, to 15467, the S&P 500 climbed 10 points, or 0.57%, to 1755 and the Nasdaq Composite gained 9.5 points, or 0.24%, to 3930.

In Wall Street parlance, "jobs Friday" -- generally the first Friday of the month when the Labor Department releases the jobs report -- is one of the most important days of the month. The 16-day government shutdown delayed the release of the data, so the report is slated for Tuesday instead.

The Labor Department said the U.S. economy added 148,000 jobs in September, missing expectations of 180,000. The unemployment rate fell to 7.2%, from 7.3% the month prior, while economists expected the rate to hold steady. The jobless rate was the lowest since November 2008. The labor force participation rate, which gauges the proportion of the population in the labor force, was unchanged at 63.2%.

"Generally speaking, very little changes as a result of today’s employment report. We continue to create just enough jobs to lower the unemployment rate even though the number of jobs created each month is unexciting (first chart below) and the rate appears to be slowing," Dan Greenhaus, chief global strategist at BTIG wrote in an email to clients.

The data have been under particular scrutiny of late as the Federal Reserve determines when exactly it will begin tapering its vast bond-buying program. Analysts expected the Fed to begin tapering in September, but then fresh economic headwinds, and the fiscal debacle in Washington, D.C., came along. Now many investment banks are expecting it to come at the end of the year, or even as late as the spring.

"The (government) shutdown has caused an additional headache for an already puzzled sounding Fed, which has sent confusing messages to the markets about when it will start tapering its asset purchase program," said Chris Williamson, chief economist at U.K.-based Markit.

"The Fed was already keen to await more data on the health of the economy before its makes any decisions on policy, but now also needs to gauge the impact the shutdown itself has had on the economy."

On the earnings front, Pratt & Whitney maker United Technologies (NYSE:UTX), chemical maker DuPont (NYSE:DD) and Travelers (NYSE:TRV) all revealed quarterly profits that beat analysts expectations.

Netflix erased a double-digit rally that had been fueled by the company's earnings report. The selling pressure was driven in part by a bearish research note from S&P Capital IQ, which downgraded Netflix to "sell." 

In commodities, U.S. crude oil prices fell $1.55, or 1.56%, to $97.67 a barrel. Wholesale New York Harbor gasoline rose 0.67% to $2.672 a gallon. Gold soared $25.80, or 1.96%, to $1,341.40 a troy ounce.

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