New York: World shares rose on Friday and the S&P 500 index marked its highest close in five years after data on the services sector and labour market data signalled the US economy continues its steady but slow recovery, while the yen hit a 2-1/2-year low against the dollar.
Yields on 10-year US notes slipped after touching an eight-month high earlier in the session. The notes had sold off sharply on Thursday after the release of Federal Reserve meeting minutes that hinted at growing unease within the Fed about asset purchases.
The benchmark S&P 500 gained almost a half a percent to notch its highest closing level since December 31, 2007, after data showed the US services sector grew in December at its fastest clip in 10 months. Stocks had surged earlier in the week following a budget deal in Washington.
European equities rose, partly on signs that Europe may be through the worst of its economic slump, while growth in the world’s private sector businesses hit a nine-month high at the end of last year according to a JPMorgan gauge.
“The economy is recovering at the hands of Fed policy, and it is getting restored to a point of critical mass where the Fed will eventually remove itself,” said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
The S&P 500 gained 7.10 points, or 0.49 per cent, to close at 1,466.47. The Dow Jones industrial average gained 43.85 points, or 0.33 per cent, to 13,435.21, and the Nasdaq Composite Index gained 1.09 points, or 0.04 per cent, to 3,101.66.
A 2.8 per cent decline in Apple shares cut into gains on the Nasdaq.
An MSCI index of global shares posted its best week in six, and its sixth week of gains in the last seven. A pan-European equities gauge rose 0.4 per cent to close at its highest level since February 28, 2011.
On Thursday, the Fed minutes disturbed the bond market, with Fed officials seen as being more concerned about the potential risks of the US central bank’s asset purchases on financial markets, even as they continue an open-ended stimulus programme for now.
“We could see the central bank tapering off its bond buying across 2013, but do not see it walking away from low interest rates quickly,” Miller Tabak’s Wilkinson said.
Most economists at Wall Street’s top financial institutions expect the Fed to stop buying Treasury debt sometime in 2013, according to a Reuters poll.
The 10-year US Treasury note was last up 2/32, with the yield down for the day at 1.9026 per cent. Yields earlier hit an eight-month high of 1.9755 per cent.