Stocks Rally After Jobs Report Announces First Drop in Unemployment Rate This Year

Jobs report announces first drop in unemployment rate this year.

ByABC News
August 6, 2009, 10:54 AM

Aug. 7, 2009— -- Stocks once again rallied today as investors were pleased with a much better-than-expected jobs report. The Dow Jones industrial average climbed 113 points to close at 9,370, closing off another straight up week on Wall Street.

The Standard & Poor's 500, the broadest index of the nation's corporate economy, rose 1.3 percent to close at 1,010, a 10-month high. The Nasdaq rose 1.37 percent today to close at 2,000.

With the pop Friday, the S&P 500 index is up 14.9 percent in only four weeks and 49.4 percent from a 12-year low in early March.

The American economy has shed 6.7 million jobs since the start of the recession, but workers got a bit of good news this morning: the unemployment rate dipped for the first time in more than a year. It now stands at 9.4 percent, down from 9.5 percent. The U.S. Department of Labor reported this morning that employers still cut payrolls in July, but the total job losses were far lower than expected: 247,000.

"The worst may be behind us," President Barack Obama said outside the White House today.

The slowing rate of job losses is leaving economists to believe that the economy is well on its way to recovery. From May to July job losses averaged 331,000 a month, down significantly from the 645,000 a month lost from November to April.

"Today, we're pointed in the right direction," Obama said.

Despite the better-than-expected jobs report, Obama added that there is still a "steep mountain to climb" towards economic recovery.

"We have a lot further to go," he said. "As far as I'm concerned, we will not have a true recovery until we stop losing jobs."

Nonetheless, with 14.5 million of Americans still contending with unemployment, the heartache continues.

For Clint White of Port Orange, Fla., losing his job as a pilot with a flight instruction company meant living a more frugal lifestyle.

Laid off twice in the past 12 months, most recently in February, White has turned to clipping coupons, eating at home and even cancelling the wedding ceremony that he and his wife never had to help make ends meet. And, soon, the couple may also have to turn to food stamps.

"We've had to cut back on everything," said White, 40. "I went from making a six-figure income to zero literally overnight."

White's wife, a biologist by training, found a part-time job working at a local deli. The childless couple has been living off of savings to supplement his unemployment benefits. But those savings are quickly dwindling and the couple will soon cash out their 401(k) to help pay for the mortgage, he said.

White may soon join the more than 34 million people already receiving food stamps. Since the recession hit in December 2007, that number has been growing.

In May, a record 34.4 million people were enrolled in the food stamp program, signifying a six consecutive month increase, according to the most recent available statistics .

Overall, the country experienced a 2 percent increase in the program's enrollment from April to May -- approximately one in nine Americans now receive food stamps. The number of people receiving food stamps jumped the most in White's home state of Florida, with a 4.2 percent increase from April to May.

But, for some struggling households, getting food stamps isn't an option. Many families make too much to be eligible for the program but, in reality, some of them are barely getting by.