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 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 larger increase than in April and more than analysts anticipated. The unemployment rate held steady at 4.5 percent, as forecast, 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 Fed is loath to do if inflation remains defiantly above the central bank’s target. The job figures Friday pleased Wall Street, however, because they showed growth without a 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.
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, which tacked on 1.19 percent for the week, also set a fresh trading high of 13,692.00 Friday.
Broader stock indicators also gained Friday to end a week that saw stocks advance amid a bevy of favorable economic figures and the continued hum of corporate takeover activity. 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 set in March 2000. Wall Street marked a milestone this week when the index set its first record close since 2000, signaling the broader market’s recovery from the dot-com implosion early in the decade.
The S&P’s gains, which totaled 1.36 percent for the week, came as a welcome development for many investors given that so many investments such as mutual funds are tied to the S&P’s performance.
The technology-heavy Nasdaq composite index rose Friday, advancing 9.40, or 0.36 percent, to 2,613.92. Despite a 2.22 percent advance for the week that far outpaced other major indexes, 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 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 was mixed against other major currencies, while gold prices rose.
Light, sweet crude rose $1.07 to $65.08 per barrel on the New York Mercantile Exchange.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to 2.85 billion shares compared with a heavy 3.27 billion Thursday. Often Fridays in the summer months see lower trading volume.
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.