July 3rd marked a historical day in the American financial markets and probably a very important day in the US economy as it continues it’s road to recovery. Non-farm payrolls which indicate the number of private sector jobs created in the last month, recorded it’s 52nd consecutive month on month employment growth.
According to reports, an additional 288,000 new jobs were created in June 2014. As a result of this increase in job creation, the US unemployment rate has nosedived to pre-financial crisis (before 2008) levels of 6.1%, beating analysts expectations of 6.3%. The positive news sent shockwaves throughout the markets, most notably in Equities. The Dow Jones industrial average, an index which is comprised of 30 blue chip stocks (companies with large market caps), for the first time in history broke through the 17,000 mark, closing at 17068.26. Simply speaking, what this means is that on average the value of stocks in the US markets increased. The Dollar also appreciated against the Euro and it seems like investor confidence had increased and are willing to take more risks, a positive for the market.
What does this mean for Janet Yellen & the Fed? This puts her under pressure to stop the printing of extra money sooner rather than later and propose an interest rate hike. On Wednesday, the Fed’s chair promised not to raise the interest rate to tackle bubbles, but she may have second thoughts after yesterday’s events.
It will be interesting to see how this all pans out over the next couple quarters but the signs are good for the US and UK to continue their continued recovery.