U.S. stocks rose, with the Standard & Poor’s 500 Index approaching a record high, as data showed employers added more jobs than forecast last month and the unemployment rate unexpectedly dropped.
McDonald’s Corp. jumped 1.6% after the restaurant chain said store sales fell less than analysts estimated. Citigroup Inc. climbed 3.3% as it sought permission to buy back shares. Goldman Sachs Group Inc. lost 2.3% for the biggest decline in the S&P 500 after lagging behind peers in a measure of capital strength used by regulators. Pandora Media Inc. surged 19% as fourth-quarter revenue jumped.
The S&P 500 rose 0.4% to 1,550.75 at 3:31 p.m. in New York. The Dow Jones Industrial Average increased 58.31 points, or 0.4%, to 14,387.80. Trading in S&P 500 stocks was 7.5% lower than the 30-day average.
“People are starting to hire, and in fact they have been hiring for a few quarters,” Carla Ann Harris, managing director and senior client advisor at Morgan Stanley, said in a television interview on Bloomberg’s “Market Makers.” “Some of the caution with respect to the payrolls is starting to abate. You’ll probably see a faster pace as people start to move towards growth as opposed to maintaining the status quo because of the uncertainty they feel in the market.”
Employment rose 236,000 last month after a revised 119,000 gain in January that was smaller than first estimated, Labor Department figures showed today in Washington. The median forecast of 90 economists surveyed by Bloomberg projected an advance of 165,000. The jobless rate dropped to 7.7%. Hiring in construction jumped by the most in almost six years.
The S&P 500 has rallied 2.1% this week, on course for the biggest gain in two months, as jobless-benefit claims fell to a six-week low and investors speculated that central banks will continue with stimulus measures. The benchmark equity gauge is less than 1% below the record of 1,565.15 reached in October 2007 and the Dow is at an all-time high.
About 82% of stocks in the S&P 500 yesterday closed above their average price from the past 50 days, according to data compiled by Bloomberg.
The Federal Reserve has embarked on three rounds of stimulus to boost the economy and Chairman Ben S. Bernanke has pledged to continue to buy bonds until the U.S. labor market improves. Minutes from the Federal Open Market Committee’s January meeting showed policy makers were divided about the strategy and some officials said an earlier end to purchases might be needed.
“They were great numbers relative to where we’ve been, but the question is whether they were too good, too fast in the eyes of the Fed,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said by telephone. His firm oversees $250 billion. “While we continue to make all-time highs, it continues to be live by the Fed, die by the Fed.”
Global stocks rose earlier as a report showed gross domestic product in Japan expanded an annualized 0.2% in the fourth quarter, the Cabinet Office said. A preliminary estimate had shown the world’s third-biggest economy contracted 0.4% in the period. China’s exports increased 21.8% in February from a year earlier, the customs administration said. That beat the 8.1% median estimate in a Bloomberg survey of economists.
Equities briefly pared gains after Italy’s credit rating was cut one level by Fitch Ratings. An inconclusive election in February produced political paralysis in the nation, threatening Italy’s ability to respond to a recession and the European debt crisis.
The Morgan Stanley Cyclical Index climbed for the fifth day. The gauge that tracks 30 U.S. companies tied to economic growth added 1.2%. The Chicago Board Options Exchange Volatility Index, known as the VIX, fell 3.4% to 12.62. The gauge has slumped 18% this week.
McDonald’s jumped 1.6% to $98.60, its highest level in almost a year. The world’s largest restaurant chain said sales at stores open at least 13 months fell less than analysts estimated in February as low prices kept consumers coming to restaurants amid a weak economy.
Citigroup added 3.3% to $46.50 as the third-largest U.S. bank sought Fed permission to repurchase $1.2 billion in shares a year after its previous request was rejected. The Fed said 17 of the 18 biggest banks could withstand a deep recession and maintain capital above a regulatory minimum.
Goldman Sachs, JPMorgan Chase & Co. and Morgan Stanley submitted more optimistic estimates of their capital strength and ability to avoid losses on trading and lending than Fed projections. The gap was widest for Goldman Sachs, which predicted its Tier 1 common ratio may fall as low as 8.6% in a sharp economic downturn, compared with the central bank’s 5.8% estimate.
Goldman Sachs fell 2.3% to $152.98 and JPMorgan, the largest U.S. bank, slipped 1.2% to $50.05. Morgan Stanley retreated 0.7% to $23.06.
Pandora surged 19% to $13.94. The biggest U.S. Internet radio service reported revenue of $125.1 million in the quarter ended Jan. 31, beating analysts’ estimates of $122.8 million. Excluding items, the company posted a loss of 4 cents a share, smaller than the 5-cent loss seen by analysts.
Joe Kennedy resigned unexpectedly as chairman and chief executive officer of the company. Kennedy, 53, made the decision after discussions with the board over the Pandora’s future, he said in a statement yesterday.
H&R Block Inc. jumped 9.1% to $27.25, for the largest rally in the S&P 500. The biggest U.S. tax preparer rose to the highest since 2008 after Chief Executive Officer William C. Cobb said he expects this year’s filing season to yield more business following an initial delay.
The S&P 500 may climb to 1,600 this year as more stocks participate in the market rally, Bank of America Corp.’s Mary Ann Bartels said. The index may drop as much as 10 to 15% after it rallied this year without a retreat of more than 3%, and investors should take advantage of any pullback to buy equities, Bartels said today on Bloomberg Radio.
“There are so many sectors and stocks breaking out of the 10-year trading range, that I’ve never seen in my career,” Bartels, New York-based head of U.S. technical and market analysis at Bank of America, said in an interview with Carol Massar. “This is a strong market.”