Job data pushes U.S. markets to new highs
Is ‘Dow disaster’ on the way or is economy really improving?
The Dow Jones continued its surge into record territory Friday, with the blue chip index breaking above 15,000 for the first time to extend the year’s rally on signs of improvement in the U.S. economy. The closely watched benchmark jumped 173 points in the first hour of trading to 15,004 before pulling back to close at 14,973.96 for a 142-point gain as several bellwether companies reached 52-week highs.
The more broadly based S&P 500 index also broke through a historic threshold, rising above 1,600 to set a new all-time intraday high.
Toronto’s S&P/TSX composite index closed 58.39 points higher at 12,438.03.
The gains were driven by a better than expected addition of 165,000 non-farm payrolls in April and an upward revision of February and March numbers.
The U.S. jobless rate fell to 7.5 per cent, the lowest level in four years.
The Dow Jones index of 30 large cap stocks is up more than 14 per cent in 2013, despite weak U.S. man- ufacturing and retail sales reports in April, federal spending cuts, slowing growth in China and a worsening economic contraction in Europe, America’s biggest export market.
In the face of the headwinds the world’s biggest economy grew by an accelerated 2.5 per cent annual rate in the March quarter on the strongest consumer spending in two years.
Economists credited a pick-up in business investment for the jobs growth and Walter Zimmermann, a technical analyst at United-ICAP who advises professional traders, said investor exuberance could push the Dow higher in the short term. But he said that may be the peak. “There is the potential for an unhappy ending,” for those who stay invested too long. He said the Dow is well ahead of fundamentals, behaving as if the U.S. economy was booming. ScotiaMcLeod wealth management director Fred Ketchen, however, said he doesn’t expect a Dow disaster. “Things are in fact improving. I think people are showing a reasonable sense of confidence that the worst is nearly behind them.” The tech heavy Nasdaq rose 38.01 points Friday to 3,378.63. The Canadian dollar was ahead 0.05 of a (U.S.) cent at 99.23 cents. In commodities, the June crude contract on the New York Mercantile Exchange rose $1.62 to $95.61 a barrel. TSX base metals stocks led the market up 2.8 per cent as July copper gained 21cents to $3.31a pound. June gold bullion was off $3.40 at $1,464.20 an ounce.