Stocks Soar 1%, Dow Spikes 200 on Jobs Data; Vix Slumps 8%

Published: Friday, 7 Jun 2013 | 11:23 AM ETBy: JeeYeon Park | Writer

Stocks added to their gains across the board Friday as the government's monthly employment report suggested the economy was tepid enough for the Federal Reserve to maintain its bond-buying program in the coming months.

All three major averages are poised to close higher for the week.
Dow Jones Industrial Average

Name Price Change %Change
DJIA Dow Jones Industrial Average 15212.60   171.98 1.14%
S&P 500 S&P 500 Index 1639.23   16.67 1.03%
NASDAQ Nasdaq Composite Index 3458.28   34.23 1.00%
The Dow Jones Industrial Average shot up more than 150 points, led by Home Depot and American Express.

The S&P 500 and the Nasdaq also advanced. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, slid near 15.

Most key S&P sectors were higher, led by health care and consumer staples.

"I think you want to get more cyclical as the summer progresses [because] the economy actually is starting to get a little bit better," said John Manley, chief equity strategist at Wells Fargo Funds Management. "The economy is weak and getting better—I want to own the stock market when things are bad and going to good."

Stocks gyrated in rocky trading Thursday as the U.S. dollar tumbled against the yen and amid ongoing questions over the murky future of the central bank's stimulus program. Major averages eventually finished at session highs and the Dow regained its footing above the psychologically-important 15,000 level.

"I think there are things going on in Japan that may come back to haunt us, but buying the dip here is giving us a big rebound here," said Art Cashin, director of floor operations at UBS Financial Services.

Play VideoNonfarm Payrolls Up 175,000 in May
CNBC's Hampton Pearson breaks down the latest number on jobs. "It's a flatline number," replies CNBC's Steve Liesman, talking with CNBC's Rick Santelli about the employment results. With Mark Zandi, Moody's Analytics; Kevin Hassett, American Enterprise Institute; Austan Goolsbee, Booth School of Business, and Greg Ip, The Economist.The U.S. added 175,000 jobs in May, according to the Labor Department, indicating the economy was expanding modestly, but not enough to convince the Federal Reserve to pare back its bond-buying program. The unemployment rate edged up to 7.6 percent. Economists surveyed by Reuters expected a gain of 170,000 jobs with the rate holding steady at 7.5 percent.

"I'm disappointed. This number was not that impressive and I don't see a lift off that we should have seen by now if QE was working—we were barely above the consensus, but for it to be a really good number, it had to be above 200,000," said Doug Cote, chief market strategist at ING U.S. Investment Management. "And judging by this number, it's clear that QE3 is not creating sustainable growth."

Employment is a key indicator for the Federal Reserve, and Chairman Ben Bernanke has indicated the central bank could start tapering off its $85 billion bond purchases if the jobs market shows consistent improvement. Other Fed officials have also fanned expectations they are prepared to consider downsizing the asset purchase program.

Meanwhile, former Federal Reserve Chairman Alan Greenspan told CNBC that the central bank should start to taper its $85 billion a month bond-buying program even if the economy is not ready for it, saying that the near-zero interest rate policy has helped stock prices, but the markets need to be prepared for faster-than-expected rise in rates.

"QE is a temporary phenomenon for the market and ultimately, as soon as [the Fed support] ends or tapers off, the market would lose major support," said Cote.
Play VideoCramer's Stocks to Watch
Don't start your trading day without finding out what CNBC's Jim Cramer is watching ahead of the opening bell.Wal-Mart gained after the big-box retailer authorized a new $15 billion share repurchase program.

Macquarie Research initiated coverage of Citigroup and Morgan Stanley with an "outperform" rating and resumed coverage of Goldman Sachs with a "neutral" rating. Meanwhile, the brokerage initiated coverage of Bank of America with an "underperform" rating and downgraded JPMorgan to "neutral" from "outperform." Still, all five major financials rallied, along with the broader market.

Intel slipped after Piper Jaffray downgraded its rating on the chipmaker to "underweight" from "neutral," pointing to the decline in the company's core PC business.

Late on Thursday, Federal health advisors recommended relaxing restrictions on GlaxoSmithKline's diabetes drug Avandia, the former blockbuster at the center of one of the biggest drug controversies in recent years. The vote could enlarge the market for Avandia in the U.S. and lay the groundwork for further research into the drug's health risks.

(Read More: FDA Panel Votes to Ease Avandia Restrictions)

Also on the economic front, April's consumer credit numbers from the Fed will be reported at 3pm ET. Economists polled by Reuters forecast a $12.5 billion gain, up on March's rise of $8.0 billion.

In other news, President Barack Obama will meet Chinese President Xi Jinping in California on Friday. It will be their first meeting since Xi became China's leader and discussions are expected to focus on strengthening Sino-U.S. cooperation.