Stocks Surge to New Highs After Hiring Climbs

Optimism about the economy swept through the stock market Friday, pushing two widely watched indexes past major milestones.

After weeks of mixed signals about manufacturing and earnings, a surprisingly strong U.S. jobs report gave investors confidence that the economy isn’t about to falter.

The market jumped from the opening bell. Traders donned party hats, and a wave of buying helped the Standard and Poor’s 500 index crack the 1,600 mark for the first time. The Dow Jones industrial average broke through 15,000.

“There’s euphoria today,” said Stephen Carl, the head equity trader at The Williams Capital Group. “That’s what you’d have to call it.”

On the floor of the New York Stock Exchange, brokers sported baseball caps emblazoned with “Dow 15,000.”

Jobs are crucial to keeping the stock market climbing. Big U.S. companies are making record profits, but much of that has come from cutting costs, not boosting sales. More jobs and more consumer spending would help.

U.S. employers added 165,000 workers last month and many more in February and March than previously estimated. The unemployment rate fell to the lowest level in four years, 7.5 percent.

The Dow rose 142.38 points to close at a record 14,973.96, up 1 percent. The S&P 500 index climbed 16.83 points, or 1 percent, to 1,614.42, also a record.

In its report, the government revised its previous estimate of job gains up to 332,000 in February and 138,000 in March. The economy has created an average of 208,000 jobs a month from November through April — above the 138,000 added in the previous six months.

On Friday, the market’s gains were broad. Eight of the 10 industry groups in the S&P 500 index rose. Nearly three stocks rose for every one that fell on the NYSE.

Companies that stand to benefit most from an upturn in the economy led the market. Those that make basic materials and produce oil and gas rose the most in the S&P 500 index.

U.S. Steel rose $1.08, or 6.3 percent, to $18.14. General Electric rose 25 cents, or 1.1 percent, to $22.57. Dow Chemical rose 84 cents, or 2.5 percent, to $33.96.

Utilities, consumer staple companies and other safe-play stocks trailed the market as investors took on more risk.

The yield on the benchmark 10-year Treasury note jumped from its lowest level of the year as traders moved money out of the safety of government bonds. The yield rose to 1.74 percent from 1.63 percent late Thursday.

Small-company stocks are more risky than bigger companies but can also offer investors greater returns. On Friday, they outpaced the broader market. The Russell 2000 jumped 14.57 points, or 1.6 percent, to 954.42, a new all-time high.

The Nasdaq composite index rose 38.01 points to 3,378.63, an increase of 1.1 percent. Still, it remains well below its dot-com peak.

Stock markets overseas also rose on the U.S. jobs report. The main indexes in France, Germany, Spain and Brazil climbed 1 percent or better.

The S&P 500 is up 13 percent from the start of the year. The Dow is up 14 percent.

Some investors were skeptical.

Among other stocks making big moves on Friday:

• Gilead Sciences jumped $2.97 to $55.15, a gain of 6 percent, one of the biggest gains in the S&P 500 index. The drug maker reported a 63-percent surge in income in the first quarter thanks to lower costs and increased sales.
• Kraft Foods rose $2.58 to $53.11, an increase of 5 percent. The food maker reported first-quarter income and revenue that beat the forecasts of Wall Street analysts as it increased sales and cut costs following its split from its global snack business.
• LinkedIn, the professional networking site, sank 13 percent, losing $26.08, to $175.59. The company issued a revenue forecast for the rest of the year that was well below what financial analysts were expecting. LinkedIn went public in May 2011 at $45 a share.

This article appeared in print on page 8 of the May 6th, 2013 edition of Hamodia.