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US markets end higher on stronger than expected job growth

The US markets ended higher on Friday, with notable gains of more than one third of a percent each, after the Labor Department data showed much stronger than expected job growth in the month of April. The Labor Department said non-farm payroll employment surged up by 263,000 jobs in April following a downwardly revised increase of 189,000 jobs in March. Street had expected employment to climb by 185,000 jobs compared to the addition of 196,000 jobs originally reported for the previous month. The report also said the unemployment rate fell to 3.6 percent in April from 3.8 percent in March, while investors had expected the rate to remain unchanged. With the unexpected decrease, the unemployment rate slid to its lowest level since hitting 3.5 percent in December of 1969. The drop in the unemployment rate was largely due to a significant contraction in the labor force, however, with the labor force shrinking by 490,000 people. The Labor Department also said the average workweek for all employees on private non-farm payrolls decreased by 0.1 hour to 34.4 hours in April.

Though, traders overlooked a separate report from the Institute for Supply Management unexpectedly showing a continued slowdown in the pace of service sector growth in the month of April. The ISM said its non-manufacturing index dropped to 55.5 in April after falling to 56.1 in March, with the index hitting its lowest level since a matching reading in August of 2017. While a reading above 50 still indicates growth in the service sector, street had expected the index to inch up to 57.0.

Dow Jones Industrial Average jumped 197.16 points or 0.75 percent to 26504.95, Nasdaq surged 127.22 points or 1.58 percent to 8164.00 and S&P 500 was up by 28.12 points or 0.96 percent to 2945.64.

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