Sun, Jul 06, 2014 - Page 15 News List

Wall Street hits new peaks after jobs data beat targets

AFP, NEW YORK

Wall Street rode improving economic data to fresh records this week, spawning comparisons to July 4th fireworks on the eve of the US Independence Day holiday on Friday.

The Dow Jones Industrial Average jumped 216.42 points (1.28 percent) for the four-day week to 17,068.26, while the S&P 500 increased 24.48 (1.25 percent) to 1,985.44. Both indices notched closing records three days in a row and the Dow closed above 17,000 for the first time.

The gains were also strong on the tech-rich NASDAQ Composite Index, which tacked on 88 points (2 percent) to close on 4,485.93.

The highlight of the week was Thursday’s US Department of Labor employment report, which showed that the nation’s economy added a healthy 288,000 jobs last month, while the unemployment rate fell from 6.3 percent in May to 6.1 percent last month.

Economists characterized the report as the latest indication of pickup in the world’s No. 1 economy after activity plummeted in the first quarter mainly due to unusually cold weather, but some analysts viewed the market’s buoyant reaction with concern.

“Investors are growing concerned with the increased bullishness in the market and ... wondering if the time is growing close to a correction,” Kenjol Capital Management LLC portfolio manager David Levy said.

Levy said the market could retreat in the coming weeks if second-quarter earnings disappoint, or if investors conclude that the US Federal Reserve is likely to move up its timetable for raising interest rates, but Wells Fargo Advisors senior equity strategist Scott Wren said the market has plenty of running room.

“Earnings are at a record high, valuations are reasonable and the global recovery, albeit slow, continues to ramble on,” Wren said in a note. “The cyclical bull market, at least in our opinion, still looks like it has several more years to run.”

Most of the week’s other economic reports were solid, if unspectacular. The Institute for Supply Management’s manufacturing purchasing managers’ index dipped 0.1 point to 55.3 last month, a disappointment compared with the expected 0.4-point gain, but well above the 50 reading that separates growth from contraction.

Meanwhile, the institute’s index for services sector activity fell to 56 last month from a strong advance to 56.3 in May, missing the 56.5 reading forecast by analysts.

Other data showed a lower US trade deficit and a big jump in pending home sales in May, while automakers reported sales last month that were 1.2 percent above last year’s level.

Kelly Blue Book senior analyst Alec Gutierrez said the strong auto sales showed consumer confidence was on the rise and likely reflects a decision of some buyers to move up purchases to take advantage of favorable financing conditions before the Fed raises interest rates.

The strong sales were a bright spot for General Motors Co, which unveiled its plan for paying potentially hundreds of victims millions in the ignition-switch recall scandal. The US auto giant also announced that it is recalling 8.4 million more cars in North America, taking the total number of vehicles it has recalled this year to about 30 million.

US banking giant JPMorgan Chase announced that chief executive Jamie Dimon will undergo about eight weeks of radiation and chemotherapy treatment for throat cancer. Dimon said his prognosis was “excellent” and that he would continue working, but the bank assured that it has a succession plan in place.

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