U.S. stocks advanced, halting a five-day slide for the Standard & Poor’s 500 Index, as investors weighed better-than-forecast jobs growth to gauge the strength of the economy and timing of Federal Reserve stimulus cuts.
Intel Corp. gained 2.4% after Citigroup Inc. advised investors to buy the stock. Rite Aid Corp. added 2.9% after November sales at stores open more than a year rose more than analysts’ estimated. J.C. Penney Co. dropped 8.1% after disclosing that regulators asked for information about its finances.
The S&P 500 rose 1.1% to 1,803.75 at 3:14 p.m. in New York. The advance trimmed the index’s drop this week to 0.1% after it had retreated each of the past four sessions. The Dow Jones Industrial Average gained 180.20 points, or 1.1%, to 16,001.71. Trading in S&P 500 stocks was 7% below the 30-day average at this time of day.
“It appears that the market is getting increasingly comfortable with a taper scenario that parallels an incrementally stronger economy,” Jim Russell, who helps oversee $112 billion as a senior equity strategist for U.S. Bank Wealth Management, said by phone. “The higher number could more easily be accepted because the market had traded down, anticipating what was likely to be a stronger number today, and of course we got that.”
The 203,000 increase in payrolls followed a revised 200,000 advance in October, Labor Department figures showed today. The median forecast of 89 economists surveyed by Bloomberg called for a 185,000 advance. A report Dec. 4 from the ADP Research Institute indicated companies boosted payrolls in November by the most in a year.
The pickup in employment, combined with faster wage gains and more hours, provides American workers with the means to spend and signals companies are confident that demand will improve. The jobless rate fell to a five-year low of 7%.
A separate report today showed consumer spending rose more than forecast in October, a sign the biggest part of the economy is gaining momentum from a firming employment.
Household purchases, which account for about 70% of the economy, climbed 0.3% after a 0.2% increase the prior month, the Commerce Department reported today.
The Thomson Reuters/University of Michigan preliminary December consumer sentiment index rose to 82.5 from 75.1 in November, a report showed today. Economists forecast an increase to 76, according to the median estimate in a Bloomberg survey.
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