FILE- In this Feb. 5, 2019, file photo trader John Panin works on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EDT on Friday, April 5. (AP Photo/Richard Drew, File)

Stocks tick higher after US jobs report hits sweet spot

April 05, 2019 - 10:08 am

NEW YORK (AP) — Stocks rose Friday morning after a better-than-expected report on U.S. jobs eased worries that the economy is slowing too sharply.

U.S. employers added 196,000 jobs last month, more than economists had forecast. More importantly, it gave encouragement to economists who said the prior month's jobs report, which was shockingly weak, may have been an aberration and that the economy can continue to grow, albeit at a slower pace.

The jobs report also hit a happy medium for markets, strategists said. It was neither too low to heighten recession worries nor too high to prod the Federal Reserve to raise interest rates.

The S&P 500 has climbed every day this week, though most of the gains were only modest, and it now sits just 1.6 percent away from its most recent record high, which was set in September.

The index has been tacking on more gains since closing out its best quarter in nearly a decade, with a 13.1 percent rise in the first three months of the year. If the index ends Friday higher, it would clinch a seven-day winning streak, its longest in a year and a half.

Stocks around the world have also been climbing as the United States and China say they are making progress on talks to ease their trade war. President Donald Trump said Thursday that the U.S. and China were "rounding the turn" in the talks, which resumed Wednesday in Washington. No details were announced, but Trump said after meeting with Chinese Vice Premier Liu He that "something monumental" could be announced within weeks.

Challenges still lay ahead for the market, though, including expectations for the weakest batch of corporate earnings reports in years.

KEEPING SCORE: The S&P 500 rose 0.4%, as of 10 a.m. Eastern time. All 11 sectors that make up the index were higher. Energy, health care and technology stocks helped lead the way.

The Dow Jones Industrial Average rose 57 points, or 0.2%, to 26,441, and the Nasdaq composite gained 0.5%.

JOBS REPORT: The stronger-than-expected jobs report helped smooth concerns about the economy, after February's report initially said just 20,000 jobs were added during the month, which was sharply below the recent pace. The government on Friday revised that number to growth of 33,000.

Average hourly earnings rose 3.2 percent in March from a year earlier, which was weaker than economists' forecasts. Markets pay close attention to the numbers because while higher wages help workers afford to buy more things, they also crimp corporate profit margins.

UPCOMING EARNINGS: Profitability is one of the market's top concerns as companies line up to begin reporting their first-quarter results next week.

Analysts expect companies in the S&P 500 to report a nearly 4 percent drop in earnings per share from a year earlier, which would be the first decline since the spring of 2016. The expected drop in profits is due almost entirely to weaker profit margins. Analysts are forecasting that revenue grew nearly 5 percent for S&P 500 companies during the quarter and that they held onto less of each $1 of that revenue as profit than a year ago.

BREXIT WOES: Britain's FTSE 100 rose 0.5% after Prime Minister Theresa May requested a further Brexit extension from the European Union until June 30 to give the U.K. breathing room since it is now scheduled to leave the bloc in just one week.

European Council President Donald Tusk proposed a longer time frame, urging the 27 other EU nations to offer the U.K. a flexible extension of up to a year to make sure the nation doesn't crash out of the bloc in a chaotic and costly way.

The CAC 40 in France gained 0.1% while Germany's DAX was virtually flat.

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AP Business Writer Elaine Kurtenbach contributed from Bangkok.

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