Jobs news lifts Dow, S&P to record highs
The Dow briefly tops 15,000, and the broader S&P 500 tops 1,600 for the first time after the government reports 165,000 jobs created in April, more than expected. The unemployment rate drops to 7.5%.
The Dow Jones Industrial Average ($INDU) and the Standard & Poor's 500 Index ($INX) surged to all-time highs on Friday after the government reported much better-than-expected payroll gains.
The Dow topped 15,000 for the first time and ended at a new closing high. The S&P 500 crossed -- and closed above -- 1,600 for the first time after the Labor Department said the national unemployment rate dropped slightly to 7.5%, down from 7.6% in March. The 7.5% rate was the lowest since December 2008. The economy added 165,000 jobs in April, the Labor Department said, about 15,000 more than expected.
The Dow closed up 142 points to 14,974 after rising nearly to 15,010. The S&P 500 gained 17 points to 1,614; its high was 1,618.46. The Nasdaq Composite Index ($COMPX) ended the day up 38 points at 3,379. It reached a 12-and-a-half-year high of 3,388.
The Dow is up 14.3% for the year, while the S&P 500 has added 13.2%, as hopes have built that a modest economic recovery that began in late 2009 will morph into something more lively. The Nasdaq's gain in 2013 is 11.9%. For the week, the Dow finished with a 1.8% gain, while the S&P 500 gained 2% and the Nasdaq added 3%. The Dow Jones Transportation Average ($DJT), often a leading indicator for the economy, may end the week with a 1.7% gain, while the small-cap Russell 2000 Index ($RUT) rose 2.3%.
The gains raised howls from market bears -- who believe stocks are hitting such lofty levels only because central banks from Japan to the United States are deliberately keeping interest rates at record-low levels.
The surge also suggests a long-expected market pullback could be nastier than expected and hit even sooner. The consensus on Wall Street has been that stocks could pull back 8% to 10%, if only because the market gains this year have been so big and come so fast.
But stocks don't seem ready to fall apart just yet. Many analysts see the Dow topping 15,000 next week.
The jobs and unemployment report was a surprise to investors and analysts around the world, who had been dismayed by economic reports showing economies globally losing acceleration after a strong start in the first quarter.
"What spring swoon?" wrote Jim O'Sullivan, chief economist of consulting firm High Frequency Economics.
The report showed gains in residential construction, motor vehicle manufacturing, professional and business employment, retail, eating and drinking places and healthcare.
"What’s the biggest drag on the economy? The government," Diane Swonk, chief economist for Mesirow Financial in Chicago told The New York Times. "If the government simply did no harm, we could be at escape velocity."
Federal government employment dropped by 8,000, with an additional 3,000 jobs in state and local government.
A big concern remains the effect of sequestration -- federal spending cuts imposed in a 2011 budget accord.
One reason for concern came after the jobs report on Friday. The Institute for Supply Management said its non-manufacturing index produced a reading of 53, lower than the 54 expected and down from 54.4 in March. A reading above 50 indicates the sector is still growing. At the same time, the Commerce Department said factory orders fell an annualized 4% in April, down from an annualized 3% in March. The consensus had been for a 2.8% decline.
The jobs report raised some additional concerns. Hours worked per week fell slightly. Average wages rose slightly.
But residential construction employment grew by 6,200, its sixth straight gain. It's up by more than 15,000 since October and up by 31,000 since bottoming in January 2011.
The so-called alternative unemployment rate, which includes people who work part-time because they can't find full-time work or who have stopped looking, was 13.9%, up from 13.8% in March. The rate is down from a high of 17.2% in October 2009.
If you want a big gain over time, look at motor vehicle employment. It fell by 708,000, or 53%, between January 2000 and June 2009. Friday report put employment in the sector at 800,600, up 28.2%.
The jobs report turned markets completely around in a matter of minutes. Germany's Xetra Dax Index ($DE:DAX) had been plodding along with a gain of around 7 points and jumped to 145 points within an hour. The index closed at 8,122, up 161 points. It is up 6.7% this year.
Twenty-six of the 30 Dow stocks were higher, with Caterpillar (CAT), Alcoa (AA) and 3M (MMM) the percentage leaders. Caterpillar, IBM (IBM) and 3M contributed nearly 51 points to the blue-chip index's gain by themselves. JPMorgan Chase (JPM), Pfizer (PFE), Merck (MRK), UnitedHealth (UNH) and AT&T (T) were the only losers.
Apple (AAPL) was up $4.46 to $446.98 The stock has climbed 16.1% since hitting a bottom of $385.10 in mid-April. Ford Motor (F) climbed 42 cents to $13.83. General Motors (GM) added 94 cents to $32.10.
But LinkedIn (LNKD) fell $26.08 to $175.59. The company's second-quarter earnings and revenue forecasts, released after Thursday's close, were less than Wall Street estimates.
LinkedIn expects revenues of $342 million to $347 million, with adjusted earnings of $77 million to $79 million. Both are well shy of the consensus for revenues of $359 million and adjusted earnings of $85 million.
Barchart.com listed more than 200 stocks hitting all-time highs, including:
Costco Wholesale (COST), Chevron (CVX), Walt Disney (DIS), Illinois Toolworks (ITW), MasterCard (MA), Nike (NKE), Sherwin-Williams (SHW), Williams-Sonoma (WSM) and Yelp (YELP).
Only five stocks hit all-time lows. Hit the hardest was Vocera Communication (VCRA), down $7.11 to $12.27. The company markets mobile communications systems primarily to hospitals. Shares fell after earnings and revenue missed Street estimates.
Crude oil in New York (-CL) settled up $1.62 to $95.61 a barrel up 2.6% on the year. Brent crude was up $1.18 to $104.03. AAA's national average price for unleaded gasoline was $3.522 a gallon. That was down slightly from Thursday but up 0.5% on the week.
Gold (-CG) settled at $1,464.20 an ounce, down $3.40 on the day but up $10.60 on the week.
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|Markets for the week|
|May 3||April 26||% chg.||YTD chg.|
|U.S. Dollar Index||82.21||82.57||-0.44%||2.92%|
|10-yr. Treasury yield||1.75%||1.66%||5.35%||-0.23%|
|(per troy ounce)|
Remember that this "strong" jobs report is still about 75,000 short of the number needed to just maintain a fixed level of employment. It is not a strong report; it just doesn't suck quite as badly as previously thought.
The stock market indicates NOTHING. The market is flooded with printed $ from the Fed. And, the good news regarding unemployment is very questionable. What these economists don't tell you is how many folks have dropped off the roles and are not eligible for unemploymemt, and how many have just completely given up. This is a multi-dimensional problem we are facing; most of the comments I see appear to be from people who really don't understand how money flows. When you don't really understand, then its a good time to keep your mouth shut and listen. Specifically folks like Mr. Torbert. I'm sorry Mr. Torbert but you sound like an uneducated idiot or maybe you're one of those educated idiots, either way...
It's ALL HYPE. Nothing has been fixed, it's still broke. Just another temporary trend exploited to make you go spend more money that you shouldn't.
Under a commie,socialist, Muslim, anti Christ president. lol. Unemployment down too.
Limbaugh stuttering and stammering today folks while Drudge has a smiley face on its web site. Hilarious
Wanna sell that gold? Hhahahahahahahahaha I must charge you assay fees and you will take a loss. Better hold on when the zombies arise and you will need that gold and those AR15s
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