Wall Street carved out a solid advance Friday after data on job creation, manufacturing and inflation injected the market with renewed confidence about the economy and sent major indexes to new record closes.
The Standard & Poor’s 500 index was the biggest gainer among the major indicators and moved toward its all-time trading high.
Investors found reason for optimism in a stronger-than-expected jobs report for May. Nonfarm payrolls rose by 157,000 last month, a bigger increase than in April and more than analysts anticipated. The unemployment rate held steady at 4.5 percent, as expected, according to the Labor Department report.
The economic picture appeared brighter still following a lower reading on inflation from the Commerce Department and data from the Institute for Supply Management’s May survey, which indicated that the manufacturing sector was strengthening.
Investors have been trying to glean from recent economic data any clues about the state of the economy and the direction of interest rates. The market hopes a slowing economy will prompt the Federal Reserve to lower rates, something the central bank is loath to do if inflation remains defiantly above the Fed’s target. The job figures Friday pleased Wall Street, however, because they showed growth without an attendant rise in wage inflation.
“If you can get job growth without wage inflation, that’s about as positive as you can get,” said Randy Frederick, director of derivatives at Charles Schwab & Co. He said, however, investors would be tempted to take profits as the market climbs higher.
According to preliminary calculations, the Dow Jones industrial average rose 40.47, or 0.30 percent, to 13,668.11, the Dow’s 26th record close for the year. The Dow also set a fresh trading high of 13,692.00.
Broader stock indicators also gained. The Standard & Poor’s 500 index rose 5.72, or 0.37 percent, to 1,536.34. The S&P traded as high as 1,540.56 and advanced toward its record trading high of 1,552.87, reached in March 2000. Wall Street marked a milestone this week when the S&P set its first record close since 2000, signaling the broader market’s recovery from the dot-com implosion early in the decade.
The technology-heavy Nasdaq composite index rose Friday, advancing 9.40, or 0.36 percent, to 2,613.92. Despite gains for the week that handily outpaced those of the Dow and S&P, the Nasdaq remains well off of its closing high of 5,048.62, set in March 2000; the index was arguably bloated by investors’ frenzy over high-tech and Internet issues.
“As the market pushes higher and higher and higher, people start to get a little more uneasy about where it’s at,” Frederick said. While he contends the markets appear reasonable at present, he said prudent investors should remain cautious.
“To me it gets a little more nervous every Friday with the market pushing higher,” he said, referring to the mood on Wall Street.
As stocks climbed Friday, bonds fell sharply. The yield on the benchmark 10-year Treasury note rose to 4.95 percent from 4.89 percent late Thursday. The dollar gained against other major currencies after the upbeat employment data, while gold prices rose.
Light, sweet crude rose $1.07 to $65.08 per barrel on the New York Mercantile Exchange.
Wal-Mart Stores Inc. was the biggest gainer among the 30 components of the Dow industrials. The retailer said it will open fewer U.S. superstores next year as it looks to reduce spending and announced plans to repurchase $15 billion in stock. Wal-Mart rose $1.87, or 3.9 percent, to $49.47.
Technology stocks were among the biggest gainers, as was the case Thursday. Fiscal first-quarter profits at Dell Inc. topped Wall Street’s estimates late Thursday and the company said it would cut 10 percent of its work force during the next two years in a bid to lower costs. Dell advanced 39 cents to $27.30.
Dow Jones & Co. jumped $7.89, or 14.8 percent, to $61.20 after the family that has long controlled the publishing company said it would meet with media mogul Rupert Murdoch to discuss his interest in buying the parent of The Wall Street Journal. The Bancrofts had initially rebuffed an offer from Murdoch’s News Corp.
News Corp. rose 59 cents, or 2.5 percent, to $24.22.
In other takeover news, CKX Inc., the operator of Elvis Presley’s Graceland estate and holder of the rights to TV’s “American Idol,” agreed to be taken private by its chairman and chief executive. CKX surged $4.02, or 37.8 percent, to $14.65.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where volume came to 1.48 billion shares compared with 1.86 billion Thursday. Often Fridays in the summer months see lower trading volume on Wall Street.
The Russell 2000 index of smaller companies rose 6.23, or 0.74 percent, to 853.41.
Overseas, the often-volatile benchmark Shanghai Composite Index fell 2.7 percent. Japan’s Nikkei stock average rose 0.47 percent. Britain’s FTSE 100 rose 0.84 percent, Germany’s DAX index rose 1.33 percent, and France’s CAC-40 rose 1.05 percent.