Stocks Rally on Jobs News

Investor sentiment brightened on strong nonfarm payroll numbers for June and a dip in crude oil prices

Stocks finished solidly higher after a rally into the close Friday, as a June employment report pointed toward firm economic growth alongside tame inflation. A dip in crude oil futures also boosted sentiment. Equity markets showed notable resiliency one day after terror bombings in London that left more than 50 people dead and 700 injured.

The Dow Jones industrial average rose 146.85 points, or 1.43%, to 10,449.14. The broader Standard & Poor's 500 index rose by 13.99 points, or 1.17%, to 1,211.86. The tech-heavy Nasdaq composite was up 73.22 points, or 1.79%, to 2,112.88.

August crude oil futures settled down $1.10 to $59.63 a barrel, as traders took profits on the strong gains from hurricane worries. The threat that hurricane Dennis may disrupt oil production still looms, keeping an underlying support for oil prices, says Standard & Poor's MarketScope.

U.S. nonfarm payrolls rose by 146,000 in June, falling short of the medan economist expectation of 190,000. But the unemployment rate dipped to 5.0% from 5.1%, and average hourly earnings rose by 0.2%. May's payrolls number was revised up to 104,000 from 78,000. While the headline payrolls figure falls short of expectations, most of the subcomponents of the data are healthy and should help the dollar, says Action Economics.

Earnings season kicked off after the close on Thursday, with aluminum producer Alcoa (AA ) reporting second-quarter earnings. The company saw earnings of 52 cents a share vs. 46 cents last year, on a 13% rise in revenue.

Consultant Accenture (ACN ) also reported earnings for the second quarter after Thursdday's close. That company saw earnings of 51 cents a share, vs. 37 cents last year. Net revenues rose by 11% to $4.08 billion.

Shares of Polo Ralph Lauren (RL ) were up after the company said it expects better-than-expected operating margins for its first quarter, along with at least a 20% rise in total revenue.

Looking ahead to next week, the economic calendar includes data on trade, consumer and producer prices, retail sales, industrial production, manufacturing, and consumer sentiment.

Next week, earnings season goes into full swing with announcements from PepsiCo (PEP ) on Tuesday, Gannett (GCI ), Apple Computer (AAPL ), Advanced Micro Devices (AMD ), and Yum! Brands (YUM ) on Wednesday, and UnitedHealth Group (UNH ) on Thursday.

Treasury Market

U.S. Treasury prices fell, and yields pushed higher, as stocks rallied, and the June employment report pointed toward strength in the economy. The benchmark 10-year note added 5 basis points in yield, finishing at 4.10%.

World Markets

European stock markets finished higher Friday, after a strong rebound from Thursday's losses. London's FTSE 100 index rose 73.90 points, or 1.43%, to 5,232.20. Insurers including Prudential and Friends Provident led the rebound after seeing steep losses from the London terror attacks on Thursday.

In Germany, the DAX index went up 67.79 points, or 1.50%, to 4,597.97. Bayerische Motoren Werke moved higher after the company said it sold 4% more vehicles in mainland China. Infineon was also higher.

In Paris, the CAC 40 index rose 76.69 points, or 1.89%, moving to 4,300.31. STMicroelectronics was higher after Goldman Sachs raised its rating on the stock to "outperform."

Asian markets finished lower Friday, but the downside was limited thanks to the late-session rebound of stocks in European and U.S. markets on Thursday. In Japan, the Nikkei index lost 24.15 points, or 0.21%, to 11,565.99, after May machinery orders hurt sentiment. Domestic stock groups including the financial services, retail, and real estate sectors showed the most weakness, while automotive and electronics, both exporter groups, rose.

In Hong Kong, the Hang Seng index fell 66.34 points, or 0.47%, to 13,964.47. Top laggards including China Mobile, HSBC Holdings, and CNOOC.

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