NEW YORK (AP) — The government's monthly survey of the U.S. job market is always important on Wall Street. It's even more important these days. Investors are trying to figure out when the Federal Reserve will decide that the economy is strong enough to thrive without its extraordinary stimulus measures.
Investors are always happy to see signs of strong hiring, which is consistent with a strong economy. What they are less happy to see is clear evidence that the economy has recovered so much that the Fed will pull back on its huge bond-buying program, which has been an important factor in this year's stock market rally.
The Fed's $85 billion in monthly bond purchases has kept long-term interest rates extraordinarily low to encourage borrowing and hiring. The Fed's actions also drive the prices of bonds higher, giving investors an incentive to buy stocks instead of bonds.
As soon as the Fed slows its purchases, the thinking goes, bond prices would fall and investors would shift money out of stocks and into bonds. In fact, the only two losing months in the market this year, June and August, occurred as investors worried that the Fed might pull back on stimulus before the economy was ready.
Here are three recent examples of big moves in the stock market on days that the Labor Department released its jobs report. The job additions are initial figures and often get revised later.
Economists expect the government to report Friday that U.S. employers added 180,000 jobs last month.
— JUNE 7:
WHAT HAPPENED: The government reported that U.S. employers added 175,000 jobs in May, a number that struck just the right balance for investors: not too many, not too few. The report suggested that the U.S. economy was expanding, but not so strongly that the Fed was close to ending its bond purchases.