Stocks ended a volatile week in positive territory Friday after a closely watched unemployment report showed the country continues to add jobs.
Investors had been closely watching the report, which showed that the economy added 175,000 jobs last month, for signs that the economy has improved enough for the Federal Reserve to begin scaling back its bond-
buying program. Those fears were dampened by the data showing a slight uptick in the jobless rate to 7.6 percent.
All of the major indexes picked up ground this week, erasing earlier losses. The Dow Jones industrial average and Standard & Poor’s 500-stock index surged more than 1 percent Friday. It was the biggest two-day gain, 2.1 percent, since January for the S&P.
The jobs data also helped boost the dollar against a basket of foreign currencies, and Treasury prices declined, indicating that there was not as much demand for the safe haven.
“It’s not great, it’s not awful,” Chris Bertelsen, the chief investment officer of Sarasota, Fla.-based wealth manager Global Financial Private Capital, said of Friday’s employment data. “It actually shows that we are in a slow-growth environment. I would be surprised if interest rates were to rise in the next three years.”
The VIX index, which is considered a good proxy for market uncertainty, reached a three month intra-trade high on Thursday, but declined 7.5 percent on Friday after the jobs report. It had been steadily rising since early May.
“The market has been in a lot of places this week, but the VIX is not telling the whole story,” said Jamie Cox, managing partner of Richmond-based Harris Financial Group. There was even more volatility in the foreign exchange market. JPMorgan Chase’s G-7 Volatility Index has reached its highest level since June 2012.
Sam Stoval, chief equity strategist at S&P Capital IQ, said that investors have overreacted to hints that the Fed would taper its bond purchases sooner than expected — as early as this summer. “Investors were looking for any excuse for profit-taking after stocks advanced sharply in May,” he said.
By historical standards, the market volatility has been lower than normal, Stoval added. The S&P has declined more than 2 percent an average of 15 days a year since 2000, he said. But it has only dipped that much one day this year and three days last year.
But the Federal Reserve will eventually allow interest rates to rise, which will spark market volatility, Jamie Dimon, the chief executive of JPMorgan Chase, warned at a conference in China. “As we go back to normal, it’s going to be scary and it’s going to be kind of volatile,” he said.