Labor Market Affects Stock Market

Investor sentiment was lifted as there was another strong data point on the labor market which pointed to opening gains on the stock market. Gains were also influenced by a November jobs report that was stronger than expected.

In November the Labor Department reported that 132,000 jobs were added to the economy. This gave the stock market an early boost along with a decrease in unemployment from 4.5 percent to 4.4 percent. This report helped the stock market by easing the concern of investors that the economy of the United States was moving towards a "hard landing."

The Federal Reserve is expected to cut interest rates soon next year in an effort to stave off the slowdown of the economy which also gives comfort to those in the stock market. However, the chance that the Federal Reserve would cut rates dropped from 48 percent to 36 percent. The expectation is that the central bank will remain at 5.25 percent and will not change.

The New York Stock Exchange had a trading volume of 1.3 billion shares and Nasdaq had 1.8 billion. However, the increased confidence in the labor market after weekly jobless claims was offset by concerns of possible Apple Computer Inc.'s delay with the iPhone which caused stocks to close lower.