U.S. stocks rallied, with the Dow Jones Industrial Average reaching 15,000 for the first time, and Treasuries slid as faster-than-forecast employment growth bolstered optimism in the world’s largest economy. Copper surged the most since 2011 to lead commodities higher.
The Dow climbed 147.41 points, or 1%, to 14,978.99 at 2:52 p.m. in New York and surged as high as 15,009.59. The S&P 500 advanced 1.1% to 1,614.7, above 1,600 for the first time, and Germany’s DAX Index rose 2% to close at a record. Ten-year Treasury yields, which reached the lowest level of the year yesterday, jumped 11 basis points to 1.74% for the biggest gain since September. Copper surged 6.8% and zinc increased 3.6%.
U.S. payrolls expanded by 165,000 workers last month and revisions to the prior two months added a total of 114,000 jobs to the employment count. The median forecast of economists in a Bloomberg survey called for an increase of 140,000 positions. The report overshadowed other data showing weaker-than-forecast growth in service industries and a drop in factory orders.
“This certainly gives some indication that there’s life in the economic recovery,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said by telephone. “Recent evidence suggested economic growth was down-shifting in the second quarter. The good news, versus what the market thought, added some confidence here.”
The Institute for Supply Management’s non-manufacturing index decreased to 53.1 in April from 54.4 a month earlier, less than the median economist forecast for a reading of 54. The 4% drop in factory orders reported by the Commerce Department was the biggest since August and followed a revised 1.9% gain the prior month that was smaller than previously estimated.
Industrial, commodity, consumer, technology and financial shares jumped at least 1.1% to lead gains in eight of the 10 of the main industry groups in the S&P 500. Caterpillar Inc., Alcoa Inc. and 3M Co. surged at least 1.8% to lead the Dow’s gain.
Kraft Foods Group Inc. climbed 5.4% as first-quarter profit beat estimates. American International Group Inc. rose 6% as operating earnings surpassed projections. LinkedIn Corp. tumbled 12% after forecasting second-quarter sales that missed analysts’ predictions.
The S&P 500 rallied 0.9% yesterday as the European Central Bank cut its key interest rate and U.S. jobless claims unexpectedly fell. The Federal Reserve said May 1 it will keep buying bonds at a monthly pace of $85 billion while standing ready to raise or lower purchases as the economy changes.