Stocks increased Friday after the release of the monthly jobs report that showed economic growth is still sluggish and would make the Federal Reserve maintain its stimulus program over the next couple of months. The Dow Jones Industrial Average increased more than 200 points, which I led by Disney and Boeing. This was the second best day for Dow in 2013. The first trading session of the year remained the best trading session for the index.
The Standard & Poor’s 500 and the Nasdaq also experienced good results for the day. The CBOE Volatility Index dropped near 15. The VIX is considered as the best gauge of fear among investors. The Dow gained 0.9 percent for the week. The S&P got a 0.8 percent increase for the same period. The Nasdaq gained 0.4 percent.
Stocks were volatile Thursday as the US dollar fell against the yen as well as speculations regarding the future of the Federal Reserve’s stimulus program. Most averages closed at session highs and the Dow rallied to finish above the 15,000 level.
According to the Labor Department, the US gained 175,000 jobs in May. This was a sign that the economy was expanding at a modest rate but not enough to make the Fed reduce its bond buying program. Jobless rate went up to 7.6 percent. Economists polled by Reuters saw an increase of 170,000 jobs and the rate unchanged at 7.5 percent.
Employment has been one of the vital indicators for the Federal Reserve. Chairman Ben Bernanke has said that the Fed could start reducing the $85 billion bond purchases if the job market continued to improve. Other Fed officials also said that they are ready to downsize the stimulus program.
Former Fed Chairman Alan Greenspan said that the Fed should begin reducing the stimulus program even if the economy is not yet ready for it. He said that the near zero interest rate policy helped the stock prices but the markets need to be prepared for the faster-than-expected increase in rates.