The Lead: U.S. adds more jobs than expected, unemployment rate at five-year low
The United States labor market had a much stronger month than many expected in November, according to the government's jobs tally released Friday, and the success could lead to the end of the Federal Reserve's economic stimulus efforts.
The Labor Department announced Friday morning that the U.S. had gained 203,000 jobs in November, easily higher than average economist predictions of 180,000 to 185,000. The gains helped push the unemployment rate down from 7.3 percent to 7 percent, the best it has been since November 2008, when the Great Recession was ravaging the economy to the tune of 9 million lost jobs in 2008 and 2009.
"The progress made since the depths of the recession in 2010 is a testament to the resilience of the American economy and the American people," Secretary of Labor Thomas Perez said in a statement Friday.
The gains stretched out across many American industries, and continue a trend of economic successes in the second half of 2013. October's job gains were revised higher to 200,000, and the U.S. has now averaged a monthly addition of 204,000 jobs in the past four months, a large jump from the 159,000 jobs the U.S. averaged in the previous four months. Thursday, the Commerce Department reported that the U.S. economy grew by 3.6 percent in the third quarter, the highest quarterly GDP reading in more than a year and substantially higher than the second quarter's growth rate of 2.5 percent.
These economic successes will undoubtedly be a major topic of conversation at the next meeting of the Federal Reserve, which is currently purchasing $80 billion in bonds every month to juice the economy. Outgoing Fed chief Ben Bernanke said in June that an unemployment rate of 7 percent would be a sign of the "substantial progress" for the economy that the Fed wants before pulling back on its bond purchases.
"There are many factors that we look at when trying to judge the state of the labor market. ... But the 7 percent unemployment rate is indicative of the kind of progress we'd like to make in order to say we've reached substantial progress," Bernanke said then.
Bernanke did not expect the progress to happen this fast, though: He has said that he expected unemployment to stay at 7.1 percent or higher in 2013 and reach 7 percent in 2014.
The news "will add further confidence to the Fed of a reduced need for monetary stimulus in the U.S. economy," TD Securities senior economist Millen Mulraine told Reuters. He now expects the Fed to announce it will begin to taper bond purchases in January, when Bernanke is scheduled to attend his final Fed meeting before giving way to the new chief, Janet Yellen.
Still, others believe the Fed will want to see more prolonged economic growth before halting its
"I still think it's more likely that the Fed is going to hold off. Even though jobs are picking up, we are still a very long way from normal in the job market," Raymond James chief economist Scott Brown told the Wall Street Journal.
SV150 market report: Apple falls, Google hits record high, Gilead drug OK'd
The positive jobs report sent stocks skyrocketing Friday, as investors showed no fear about the end of the Fed's bond-buying program, but Silicon Valley stocks underperformed the larger market as Apple's (AAPL) positive momentum halted.
Apple dropped 1.4 percent to $$560.02 after hitting 52-week highs Thursday, despite the kickoff of a new technology the Cupertino company hopes will boost sales in its retail stores. Apple is seeking to guide its customers through Apple stores with iBeacon, in-store location technology that will allow Apple to send specially-tailored information to visitors' smartphones, which ISI Group analyst Brian Marshall found initially disappointing, but with promise for the future. Apple also filed papers in its San Jose legal battle with Samsung requesting its Korean rival pay $22 million in legal fees and costs after a jury awarded Apple about $900 million in patent-infringement fines.
Google reached record intraday and closing highs Friday, gaining 1.2 percent to $1,069.87 despite being targeted by environmental groups and facing a possible setback with its barge project. The Mountain View search giant is reportedly working on a set-top box for televisions, which could challenge its own Chromecast offering, while the genetic-testing startup founded by the wife of Google co-founder and CEO Larry Page, and partially funded by Google, announced it would stop offering popular tests as requested by the Food and Drug Administration.
The FDA had better news for another Silicon Valley company: Gilead Sciences (GILD) received final approval for its breakthrough hepatitis C drug, which is expected to add about $2 billion to the Foster City company's revenues from domestic sales alone. After closing with a 1.1 percent gain at $73.99, Gilead moved closer to $74.50 in after-hours trading. After suffering a drop of more than 5 percent Thursday on concerns about its "Battlefield" video game franchise, Electronic Arts (ERTS) rebounded Friday, 5.9 percent to $22.24 after the Redwood City company shifted resources and sounded confident it could fix the issues. Intel (INTC) gained 2.3 percent to $24.82 after Citigroup and Drexel upgraded the Santa Clara chipmaker, but Tesla Motors (TSLA) fell 2.2 percent to $137.36 despite the first sale of one of its Model S electric cars involving bitcoin.
Social-networking stocks were mixed Friday. Twitter fell from Friday's record closing high, declining 1.5 percent to $44.95 amid conflicting notes from Bernstein Research analyst Carlos Kirjner and Evercore Partners analyst Ken Sena. Facebook dropped 0.8 percent to $47.94 while clarifying its recent announcement about changes to its News Feed, but the Menlo Park social network seems unlikely to go after a payments offering that could generate revenues. LinkedIn headed the other way, however, gaining 2.9 percent to $232.99 after BMO Capital Markets analyst Daniel Salmon upgraded the stock and boosted his price target to $270, explaining "the opportunity of providing more customized versions of its products could yield valuable benefits."
The SV150 index of Silicon Valley's largest tech companies: Up 7.61, or 0.53 percent, to 1,454.22
The tech-heavy Nasdaq composite index: Up 29.36, or 0.73 percent, to 4,062.52
The blue chip Dow Jones industrial average: Up 198.69, or 1.26 percent, to 16,020.2
And the widely watched Standard & Poor's 500 index: Up 20.06, or 1.12 percent, to 1,805.09
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.