Investor Concerns About the Fed’s Decision Eased

On Wall Street, stock prices surged on Friday as better-than-expected employment data indicated a strengthening U.S. economy, easing investor concerns about the consequences of the Fed’s reduction of stimulus measures.

The Dow Jones rose by 147 points, or 0.98 percent, to 15,135 points, while the S&P 500 increased by 1.02 percent to 1,631 points, and the Nasdaq index climbed 1.04 percent to 3,479 points.

The eagerly awaited data showed yesterday that in June, the number of employed in the U.S. increased by 195,000, 30,000 more than expected. Meanwhile, the unemployment rate remained at 7.6 percent.

The strong employment growth suggests that the U.S. central bank could begin reducing its monetary stimulus programs as early as September, leading to uncertainty in the market following the release of this data.

The Fed’s programs for purchasing government and mortgage-backed securities amounting to $85 billion per month have long supported stock price growth, causing investors to fear that a reduction would lead to a loss of market support.

However, stock prices quickly recovered as the acceleration of economic growth indicates that monetary stimulus may not be needed in the future.

As a result, among the biggest gainers yesterday were stocks in the financial, industrial, and other sectors related to economic growth.

“The employment report shows that the economy is growing and that the private sector is hiring, which positively impacts growth-related sectors,” says Janna Sampson, director at OakBrook Investments.

Thanks to yesterday’s rise in stock prices, the Dow Jones has strengthened by 1.5 percent this week, while the S&P 500 rose by 1.6 percent and the Nasdaq index by 2.2 percent.

In European markets, however, stock prices fell yesterday. The London FTSE index weakened by 0.72 percent to 6,375 points, while the Frankfurt DAX plummeted by 2.36 percent to 7,806 points, and the Paris CAC decreased by 1.46 percent to 3,753 points.