Dow breaks 18,000 on strong jobs report
United States stocks surged Friday, finishing just short of record highs as investors responded enthusiastically to a strong June job market report.
The buying accelerated throughout the day after the US Labor Department said employers added 287,000 jobs last month. That was far more than analysts expected, and after weak reports from April and May, it suggests that the economy and job market haven't run out of steam.
"It was a strong report and it put to bed worries that we were seeing the job market sputter," said Kate Warne, investment strategist for Edward Jones.
Mining and materials companies, which would stand to benefit more than other industries from an accelerating economy, took the biggest gains. Machinery makers also jumped. Only eight stocks on the Standard & Poor's 500 finished lower.
The Dow Jones industrial average surged 250.86 points, or 1.4 per cent, to 18,146.74. The S&P 500 rose 32 points, or 1.5 per cent, to 2,129.90. The Nasdaq composite advanced 79.95 points, or 1.6 per cent, to 4,956.76.
Wages rising faster
The government said the unemployment rate rose slightly as more people looked for jobs. There was also evidence wages were rising faster. The April and May reports worried investors, in part because they came after the economy grew just 1.1 per cent over the first three months of 2016. The US economy has been growing for more than six years and investors are wary that that streak could end.
The S&P 500 is less than a point away from the record high it set in May 2015. The Dow, too, is close to a record. They reached those peaks before investors got very worried about the slowdown in China's economy, before the Federal Reserve started raising interest rates for the first time in almost nine years, and before anyone thought Britain might really vote to leave the European Union.
While all of those concerns have hurt stocks, they have recovered. But it's been a very careful, uneasy rally. The stocks that have done the best in the last year are phone companies and utilities, which pay big dividends and are considered safe. US bond yields have set all-time lows in the last few days. Gold is at its highest price in two years.
Uninspiring economic growth
US economic growth has been steady but uninspiring and corporate profits and revenues are in a slump. But the alternatives don't look any better. China has been shaky. The economies of Japan and Europe are weak, and the yields on some European bonds are negative as nations try to boost their economic growth. That means investors have to pay to own those bonds. So even if US stocks aren't setting the world alight, they've been good enough.
"I don't think investors are nearly as excited as they would typically be in an environment where stocks are close to record highs," said Warne.
The yield on the 10-year Treasury note fell to 1.36 per cent from 1.39 per cent. That's far below the 2.29 per cent level it began the year at. When demand for bonds is high, their prices rise and yields fall. That has the effect of sending interest rates on many kinds of loans, including mortgages lower, since those rates are tied to bond yields.
Energy prices were slightly higher. Benchmark US crude added 27 cents to US$45.41 a barrel in New York. Brent crude, a standard for international oil prices, picked up 36 cents to US$46.76 a barrel in London.
In other energy trading, heating oil remained at US$1.41 a gallon. Natural gas added two cents to US$2.80 per 1,000 cubic feet.
The dollar fell to 100.46 yen from 100.76 yen. The euro slipped to US$1.1049 from US$1.1055. The British pound rose to US$1.2952 from US$1.2896.