Dow reaches six-year high
NEW YORK – Wall Street barreled higher Friday, sending the Dow Jones industrials up 138 points to a six-year high after a report of modest job growth bolstered hopes that the Federal Reserve will end its interest rates hikes. All three major indexes finished the week with gains.
Investors saw a slowdown in April employment growth as the latest sign of a softening economy, a reason for the Fed to stop raising interest rates. That countered worries over rising wages, which followed an upswing in employers’ labor costs on Thursday.
Jack Caffrey, equities strategist for JPMorgan Private Bank, said the market appeared to be focusing on recent positive data instead of considering the long-term consequences of why the Fed would stop boosting rates – because economic growth has slowed enough to contain inflation.
“People are taking the weaker job creation, the stability in the unemployment rate and the uptick in jobless claims and spinning that into a hope the Fed will move to the sideline sooner than later,” Caffrey said. “It’s almost a hope-for-relief rally instead of a ‘the Fed is done, things are slowing down’ mentality.”
Falling oil prices also helped stocks to their gains.
The Dow rose 138.88, or 1.21 percent, to 11,577.74, its best showing since the Dow reached its all-time high of 11,722.98 on Jan. 14, 2000. The Dow is now just 145.54 away from setting a new record.
Broader stock indicators were higher. The Standard & Poor’s 500 index gained 13.51, or 1.03 percent, to 1,325.76, its highest level since Feb. 15, 2001; the Nasdaq composite index advanced 18.67, or 0.8 percent, to 2,342.57. The S&P remains 13.2 percent away from its high, while the Nasdaq is 53.6 percent lower than its 2000 record.
Advancing issues led decliners by a 3-to-1 margin on the New York Stock Exchange, where final consolidated volume of 2.47 billion shares lagged the 2.5 billion shares traded Thursday.
The light trading volume was indicative of the market’s ongoing uncertainty about interest rates and whether stocks can press past multiyear highs, said Christopher Piros, director of investment research for Prudential’s Strategic Investment Research Group. Meanwhile, the jobs data left the inflation riddle unanswered, he said.