Sun, May 05, 2013 - Page 15 News List

US markets soar as jobs report exceeds estimates

RAMPANT BULLS:The news of 165,000 jobs added last month acted as a red flag to market bulls as the data pushed both US and EU markets to record-setting highs

AFP, NEW YORK

US stock markets soared on Friday, with the Dow and S&P 500 setting new records as strong US jobs data for last month revived confidence in the US economic recovery.

At the end of a cautious week, tempered by bearish economic views from the US Federal Reserve and the European Central Bank, market bulls finally unleashed their energy after the US report painted a much brighter picture of the economy than was felt in recent weeks.

The US Department of Labor reported an addition of 165,000 jobs for last month, which exceeded analysts’ expectations. However, it also made large upward revisions for the prior two months that showed 114,000 more jobs were added than initially estimated.

US stocks soared 1 percent from the opening bell, with the Dow Jones Industrial Average breaching 15,000 for the first time and the S&P cracking 1,600.

At the close, the Dow finished at 14,973.96, up 0.96 percent. The S&P 500 gained 1.05 percent to 1,614.42, and the NASDAQ Composite Index rose 38.01, or 1.14 percent, to 3,378.63

The jobs report reverberated beyond US shores, with European markets shooting higher in parallel.

The DAX 30 of leading German shares jumped by 2.02 percent to an all-time high of 8,122.29 points while in London, the FTSE 100 index added 0.94 percent to 6,521.46 points and in Paris the CAC 40 jumped 1.40 percent to 3,912.95 points, its highest closing since July 2011.

“Today’s report has clearly quashed worries that the US labor market has failed to improve this year and the economic recovery has stalled,” ETX Capital economist Ishaq Siddiqi said.

“We’re gaining more confidence that the recovery is gaining strength,” said Greg Peterson, director of research at Ballentine Partners.

The soaring markets continue to be fueled by the campaign by central banks to keep interest rates ultra-low to promote growth.

Those efforts were reaffirmed this week, when the US Federal Reserve on Wednesday kept its aggressive bond-buying program, saying that it “continues to see downside risks to the economic outlook.”

The US jobs report raised confidence that the vectors of the US economy are pointing in the right direction, potentially also boosting the fortunes of its trading partners in Europe and beyond.

“The reason the market is heading higher is because most people on Wall Street expect the fundamentals to improve as the year progresses,” Standard & Poor’s chief investment strategist Sam Stovall said.

Still, Wall Street insiders said there is reason for caution.

The most recent round of quarterly corporate earnings has shown a pattern of solid earnings growth, but weak revenue growth. That trend suggests companies are ramping up profits by cutting costs, not by investing in growth.

“It’s really a continuation of the half-speed recovery we’ve been in since this economy pulled out of recession,” Stovall said.

The Friday jobs report culminated a busy week of generally positive economic news.

The Institute for Supply Management said its manufacturing purchasing managers’ index came in below expectations, falling to 50.7 last month from 51.3 in March, but the monthly Case-Shiller index of city housing prices showed prices rose a seasonally adjusted 1.2 percent in the 20 biggest urban markets.

Investors were also heartened by a robust rise in the Conference Board’s consumer confidence index last month to 68.1 points from a revised 61.9 in March.

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