BackUS stocks rise as jobs data spur optimism on economy, rates
The job growth and steadily rising wages may keep the Fed on track to raise its benchmark interest rate later this year
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New York: US stocks rose after a rebound in hiring last month bolstered optimism that economic growth is accelerating, but not fast enough to warrant higher interest rates in June.
Raw-material shares rallied to a two-month high after a jump in construction jobs. Home Depot Inc. and Whirlpool Corp. advanced at least 2.2%. Lennar Corp.’s 2.4% climb led gains among homebuilders. Microsoft Corp. advanced 2.1%, pacing a climb in technology stocks for a second day. AOL Inc. soared 11% after quarterly profit exceeded estimates.
The Standard & Poor’s 500 Index gained 1.3% to 2,115.29 at 12:23 pm in New York, erasing a weekly decline. The Dow Jones Industrial Average jumped 258.31 points, or 1.4%, to 18,182.37. The Nasdaq Composite Index added 1.2%.
“This is just-right jobs for stocks," said Darrell Cronk, president of Wells Fargo Investment Institute in New York. “We hit it right where we needed to be, not too much and not too little. You want an economy growing north of 200,000 jobs, but if you get closer to 300,000 you start to have conversations about inflationary pressures and the economy heating up too fast, so this number is perfect."
Wage growth
The 223,000 net increase in April employment followed a March gain that was the smallest since June 2012. The jobless rate fell to the lowest since May 2008. The job growth and steadily rising wages may keep the Federal Reserve on track to raise its benchmark interest rate later this year.
Wage growth remains limited, though, with average hourly earnings rising 0.1% after a revised 0.2% March gain that was weaker than initially reported. Hourly pay was up 2.2% last month from a year earlier.
Fed policy makers are monitoring labor data to help determine when to raise borrowing costs after growth slowed in the first quarter. Fed Bank of Chicago President Charles Evans said this week the central bank should wait for more evidence wages are advancing before boosting interest rates.
VIX tumbles
A rally in UK stocks Friday pushed European shares to their biggest gain of 2015 after a surprise election victory for the Conservatives kept David Cameron on course to return as Britain’s prime minister. The Stoxx Europe 600 Index climbed 2.9%.
Companies in the S&P 500 are beating earnings estimates and analysts have reversed their predictions for a slump in corporate profits. Analysts now project a first-quarter gain of 0.2%, compared with 5.6% drop at the start of the earnings season. They still predict declines in the second and third quarter.
The Chicago Board Options Exchange Volatility Index sank 15% to 12.89, its biggest drop since December. The gauge, known as the VIX, is still on track for a second straight weekly rise.
Martin Marietta
All 10 of the S&P 500’s main groups rose Friday, led by health-care and raw-materials companies. Nine of the groups rallied more than 1%.
Martin Marietta Materials Inc., climbed 2.9% to a more than seven-year high. The producer of ingredients for concrete led the raw-materials group to a two-month high after construction companies last month added the most workers since January 2014. DuPont Co. and Dow Chemical Co. added more than 1.8%.
Biotechnology shares were top performers in health-care, as the Nasdaq Biotechnology Index climbed for a third day, up 2.8%. Health-care companies in the S&P 500 advanced 1.8%, the most in almost two months. Biogen Inc. added 4%, the most since 20 March, after saying it will buy back $5 billion in stock.
Boeing, AOL
Boeing Co. rose 2.6% to lead industrials higher. Airlines rallied for a third day as Southwest Airlines Co. and Delta Air Lines Inc. increased at least 1.8%.
Among consumer shares, travel-related companies paced the rally. Cruise lines Royal Caribbean Cruises Ltd. and Carnival Corp. climbed more than 3.5%, the most in more than a month. TripAdvisor Inc. jumped 4.4% and Marriott International Inc. increased 2.8%.
AOL soared 11%, the most in 16 months, after quarterly profit beat analysts’ estimates as the owner of the Huffington Post and other websites increased global advertising revenue.
Monster Beverage Corp. fell 8.6%, the biggest drop in two years, as first-quarter profit and sales trailed analysts’ estimates.
Nvidia Corp. lost 8.6% as the largest maker of chips for computer-graphics cards gave a forecast for second-quarter sales that fell short of analysts’ estimates, hurt by the persistent slump in PC demand. Bloomberg
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