Dow logs biggest gain in five months after hiring picks up in May, easing concern over Fed

Richard Drew/Associated Press - In this Thursday, May 23, 2013, photo, Trader VIncent Quinones, center, works on the floor of the New York Stock Exchange at the close of trading.Stock markets were volatile on Friday June 7, 2013 as investors awaited a key U.S. jobs report for clues on how much longer the Federal Reserve will keep providing stimulus to the world’s largest economy.

By Associated Press, Associated Press Jun 07, 2013 08:45 PM EDT
AP
Published: June 6 | Updated: Friday, June 7, 1:45 PM

NEW YORK — Steady growth in hiring last month sent the stock market sharply higher Friday.
U.S. employers added 175,000 jobs in May, slightly more than the 170,000 forecast by economists, according to data provider FactSet. More people also began looking for work, another encouraging sign.



U.S. added 175K jobs in May; unemployment rate at 7.6 percent

Ylan Q. Mui 10:00 AM ET
More people began looking for work last month, but the recovery's pace remains slow.

The report gave a boost to stock market bulls, who expect the Fed to keep up its stimulus program as the U.S. economy continues to recover moderately. That combination pushed the Dow Jones industrial average and the Standard & Poor’s 500 index to record highs last month.
Federal Reserve policy makers are now all but certain to refrain from easing back on their stimulus program at the next two-day policy meeting, which starts June 18, said Phil Orlando, chief equity strategist at Federated Investors.
“This was, in our view, very much a ‘Goldilocks’ number,” said Orlando. “There is zero chance that the Federal Reserve is going to start tapering monetary policy.”
The central bank is buying $85 billion of bond every month to keep interest rates low and encourage borrowing and spending. Low interest rates also keep bond prices high and push up demand for riskier assets like stocks.
Stocks rose strongly in the morning, then eased slightly in the early afternoon. The gains accelerated in the final hour of trading.
The Dow Jones Industrial average had its best day in five months. It rose 207 points, or 1.4 percent, to close at 15,248.12. That gain was surpassed this year only by its 2.4 percent rise Jan. 2.
Boeing led the index higher with a gain of $2.73, or 2.7 percent, to $102.49. Industrial conglomerate 3M gained $2.44, or 2.2 percent, to $111.11. Twenty-six of the 30 stocks in the Dow rose.
The Standard & Poor’s 500 index rose 20.82 points, or 1.3 percent, to 1,643.38. The Nasdaq composite rose 45.16 points, or 1.3 percent, to 3,469.22.
Nine of the 10 industry groups in the S&P 500 index rose, led by consumer discretionary stocks, which stand to benefit more than other sectors if the economy picks up. Industrial companies and banks also posted strong gains.
The only S&P 500 industry group that fell was telecommunications, a so-called defensive sector that investors favor when they are seeking safety and high dividends.
Stocks slumped on Tuesday and Wednesday after disappointing reports on private-sector hiring and manufacturing. The S&P 500 index lost 1.9 percent over those two days. Friday’s gain erased the S&P’s loss for the week. The S&P gained 0.8 percent since last Friday.
Financial markets have turned volatile over the past two weeks as traders parse comments from Fed officials for hints about when the central bank will cut back on its support. When it happens, the wind-down will help nudge interest rates higher.
For investors who expect the Fed to stay the course, “these types of slow economic growth reports speak to that,” said Kevin Mahn, chief investment officer at Hennion & Walsh Asset Management. “It keeps interest rates at record lows and it keeps the equity markets humming.”
http://www.washingtonpost.com/business/stock-market-has-best-day-in-nearly-3-weeks-dow-regains-15000-averts-3-day-losing-streak/2013/06/06/9773ca52-cf15-11e2-8573-3baeea6a2647_story.html