Stocks gain for sixth day on strong jobs growth
Stocks gain for sixth day on strong jobs growth
Mar. 08, 2013
NEW YORK (AP) — A burst of hiring in February pushed stocks higher on Wall Street.
The Dow Jones industrial average gained 67.58 points, or 0.5 percent, to 14,397.07. The index surpassed its previous record close Tuesday and logged a sixth straight increase Friday.
The Standard & Poor's 500 index rose 6.92 points, or 0.5 percent, to 1,551.18. The Nasdaq composite advanced 12.28 points, or 0.4 percent, to 3,244.37.
U.S. employers added 236,000 jobs last month and the unemployment rate fell to 7.7 percent from 7.9 percent in January, the Labor Department reported. That's far better than the 156,000 job gains and unemployment rate of 7.8 percent that economists surveyed by FactSet expected.
The strong job growth shows that employers are confident about the economy despite higher taxes and government spending cuts.
Optimism that hiring is picking up has been one of the factors bolstering the stock market this year. Stocks have also gained on evidence that the housing market is recovering and company earnings continue to growing.
Stocks have also been boosted by continuing economic stimulus from the Federal Reserve.
The U.S. central bank began buying bonds in January 2009 and is still purchasing $85 billion each month in Treasury bonds and mortgage-backed securities. That has kept interest rates near historic lows, reducing borrowing costs and encouraging investors to move money out of conservative investments like bonds and into stocks.
Investors have also been pondering what the Fed's next move will be. That question was in especially sharp focus Friday after the government reported the surge in hiring last month.
Andres Garcia-Amaya at JPMorgan Asset Management said that the strong jobs report may heighten speculation that the Fed will end its stimulus sooner than investors had anticipated, which would be a negative for the stock market.
"If the economy maintains or increases the pace of job creation....that could change the Fed's stance," said Garcia-Amaya. "That could mean that the Fed could take the 'punch bowl' away."
The Dow has gained 9.9 percent this year and is trading at record levels, having broken its previous record of 14,164 on Tuesday. The Standard & Poor's 500 index is up 8.8 percent since the start of the year, and is less than 1 percent short of its all-time high close of 1,565 set Oct. 9, 2007.
The stock market is drawing in more investors as it continues to surge.
Investors put $3.2 billion into stock mutual funds in the week ending Wednesday, data provider Lipper reported Friday. That's the ninth straight week of net inflows to stock funds, bringing this year's total to $59 billion.
Friday's jobs report strengthens the case of stock market bulls, who say the economy is gaining momentum following a long and tepid recovery after the financial crisis and Great Recession, said JJ Kinahan, chief derivatives strategist at TD Ameritrade.
"It gives hope to those that say this rally isn't just about the Fed, it's about the economy recovering," said Kinahan. "It's giving people confidence that maybe the economy is turning the corner."
The Dow is up 120 percent since reaching a 12-year low during The Great Recession. The index bottomed out almost exactly four years ago, on March 9, 2009, at 6,547. The S&P 500 has gained 129 percent since hitting its own bottom of 676 on the same date.
McDonald's contributed the most to the Dow's gains, rising $1.62, or 1.7 percent, to $98.71. The fast-food restaurant chain reported that a key sales figure fell 3.3 percent in February, but the decline wasn't as bad as analysts were expecting.
H&R Block had the biggest percentage gain on the S&P 500, advancing $2.30, or 9.2 percent, to $27.28.
The company said late Thursday that its net loss widened because of a delay to the start of this year's tax season. The stock got a boost, though, after CEO William Cobb said on a conference call that the company was winning market share, Barrington Research analyst Joe Janssen said.
The yield on the 10-year Treasury note, which moves inversely to its price, rose to 2.06 percent from 2 percent Thursday. The yield is at its highest in 11 months.
Among stocks making big moves;
— Pandora gained $2.06, or 17.6 percent, to $13.79 after the Internet radio company issued a strong profit forecast and said its mobile business was improving. Pandora also said its CEO, Joseph Kennedy, would leave.
— Skullcandy fell $1.51, or 22.5 percent, to $5.21 after the headphone maker projected a big loss and a drop in sales for the current quarter. The company said this year's results will likely be worse than in 2012.
— Foot Locker fell $2.52, or 7.1 percent, to $32.79 even after reporting that its fiscal fourth-quarter profit jumped 28 percent. An extra sales week helped boost earnings, but analysts were expecting more.