New York: US stocks closed out a historic week with another day of gains on Friday, as the Dow hit yet another record closing high on a payrolls report that surpassed even the most optimistic forecasts.
The S&P 500 climbed for its sixth straight day, putting it less than 1 per cent from an all-time closing high. The benchmark S&P index rose for its ninth positive week out of the last 10. All three major US stock indexes racked up their biggest weekly gains since the first week of the year.
Hiring in the United States jumped in February with non-farm payrolls adding 236,000 last month, surging past expectations for a gain of 160,000 jobs and even topping the highest forecast of analysts polled by Reuters. The unemployment rate fell to 7.7 per cent, the lowest since December 2008.
“This was a lot higher than anyone was expecting, and it definitely shines light on the fact that the economy is improving,” said Owen Fitzpatrick, head of US equities at Deutsche Bank Asset and Wealth Management in New York.
“While in the near term, we may be overdue for a pause, given how much we’ve run. It is very constructive to see numbers improve like this,” Fitzpatrick said.
For the year, the Dow is up 9.9 per cent, while the S&P 500 is up 8.8 per cent and the Nasdaq is up about 7.5 per cent.
The day’s gains were offset by a decline in some bank shares in the wake of the Federal Reserve’s “stress test” results. While the results were largely positive and as expected, with the Fed saying the biggest US banks had enough capital to withstand a severe economic downturn, investors took the opportunity to book profits in the group.
Bank of America Corp fell 1.6 per cent to $12.07 (Dh44.29).
Goldman Sachs Group Inc dropped 2.3 per cent to $152.98 and ranked as the S&P 500’s biggest percentage decliner. While Goldman met the minimum Tier 1 common capital ratio that the Fed tested for, it had one of the lowest outcomes above the threshold.
Citigroup Inc had the highest Tier 1 common capital ratio, according to the Fed’s “stress test” results; its stock jumped 3.7 per cent to $46.68.
“Financials have had a good run, so people are selling on the news, except for Citi, which was a real outlier on the positive side,” Fitzpatrick said.
Intraday high
The S&P financial sector index, which had climbed more than 10 per cent this year, was up just 0.3 per cent in late afternoon trading. The index, however, hit a 52-week intraday high earlier in the day.
Still, investors were mindful of the possibility of a bigger pullback after the steady gains this year. The last correction for the benchmark S&P 500 index was nearly a year ago — a 9.9 per cent slide from April highs to the start of June.
The Dow Jones industrial average rose 67.58 points, or 0.47 per cent, to 14,397.07, another record closing high. The Standard & Poor’s 500 Index advanced 6.92 points, or 0.45 per cent, to 1,551.18. The Nasdaq Composite Index gained 12.28 points, or 0.38 per cent, to end at 3,244.37.
Earlier in the session, the Dow climbed as high as 14,413.17 — a fresh intraday record. Nine of the 30 Dow components hit new highs for the year, including General Electric Co, Johnson & Johnson and Chevron Corp.
For the week, both the Dow and the S&P 500 closed up 2.2 per cent, while the Nasdaq rose 2.4 per cent. It was the best weekly performance for all three since the first week of the year.
About 65 per cent of the stocks traded on both the New York Stock Exchange and Nasdaq closed higher. Roughly 6.27 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average so far this year of about 6.45 billion shares.
Wholesale inventories added to the stream of positive economic data. In January, US wholesale inventories increased 1.2 per cent to $504.4 billion — the fastest pace of growth since December 2011. The strong January reading followed a revised 0.1 per cent rise in December 2012.
Biggest boost
McDonald’s Corp gained 1.7 percent to $98.71 and gave the biggest boost to the Dow after the fast-food hamburger chain said February sales at established restaurants fell just 1.5 per cent, a little better than expected.
H&R Block Inc climbed 9.2 per cent to $27.28 and ranked as the S&P 500’s biggest percentage gainer a day after saying cost cuts would drive its profits in 2013.
Pandora Media shares jumped about 18 per cent to $13.79 on stronger-than-expected quarterly results. The company, the leader in Internet-streaming radio, also made the surprising announcement that CEO Joseph Kennedy is stepping down.
Skullcandy Inc plunged 22.5 per cent to $5.21 after the headphone maker said it expects to post a loss in the current quarter, even though fourth-quarter revenue was higher than expected.
