Dow Average Tops 17,000 for First Time as Payrolls Rise Amid ECB Plans

Thursday, 03 Jul 2014 08:41 PM

 

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The Dow Jones industrial average topped 17,000 for the first time Thursday, another in a string of records for the index that has lifted portfolios in a five-year bull market for stocks.

The gain pushed the 118-year-old Dow, the oldest gauge for tracking stock prices, past its first 1,000-point milestone this year.

The record came after another day of good news for the economy: The government reported surprisingly robust job gains in June, underscoring a recent trend of stronger hiring and healthy manufacturing.

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The Dow's rise this year has been built on tiny gains, barely noticeable day by day, a stark contrast to last year's bigger moves that drove the index up 27 percent. Thursday followed the recent script. The index rose from the start of trading, but ended the day just half of percentage point higher. Trading was also extremely light. The market closed early ahead of the Fourth of July holiday.

Investors also pushed the Standard & Poor's 500 index within striking range of its round-number milestone — just 15 points from 2,000.

"Right now the story is onward and upward," said Neil Massa, senior trader at John Hancock Asset Management.

On Thursday, the government reported that U.S. employers added 288,000 workers to their payrolls in June and the unemployment rate fell to 6.1 percent. The U.S. economy is now creating around 231,000 jobs each month in 2014, compared to roughly 194,000 a month last year.

"It topped even some of the most optimistic of forecasts," Massa said.

The jobs report is the latest piece of data to show the economy continues to improve steadily. On Wednesday, payroll processor ADP said private businesses added 281,000 jobs in June, up from 179,000 in May. Also this week, the Institute for Supply Management said the U.S. manufacturing expanded for the 13th consecutive month.

Also helping stocks are solid corporate earnings and continued support from central banks. That has pushed prices higher despite a harsh U.S. winter and worries about fighting in Ukraine and Iraq.

The Dow rose 92.02 points to finish at 17,068.26. The S&P 500 closed up 10.82 points, or 0.6 percent, to 1,985.44 and the Nasdaq composite gained 28.19 points, or 0.6 percent, to 4,485.93.

While the Dow's passing of 17,000 is notable, most Wall Street professionals don't focus on it. The vast majority of mutual funds and investors use the broader S&P 500 as their benchmark for how they are performing.

The Dow has lagged behind the rest of the stock market this year. The index is up 3 percent compared with the S&P 500's rise of 7.4 percent.

"That said, investors should be feeling good about Dow 17,000," Scott Wren, a senior equity strategist with Wells Fargo Advisors, wrote in a note to investors. "The stock market has more than recovered from levels seen during the financial crisis more than five years ago. Slow and steady can win the race; and it has."

The Dow has climbed more than 10,500 points since its Great Recession low of 6,547.05 on March 9, 2009.

Among individual stocks, the pet supply chain PetSmart rose the most in the S&P 500 on Thursday. PetSmart gained $7.48, or 13 percent, to $67.28 after the activist investor firm Jana Partners disclosed a 9.9 percent stake in the company.

Investors sold bonds after the strong jobs report. The yield on the 10-year Treasury note rose to 2.64 percent from 2.63 percent late Wednesday. Bond yields rise when prices fall.

Thursday was the slowest trading day of the year for stocks. Roughly 1.9 billion shares changed hands on the New York Stock Exchange.

U.S. markets will be closed Friday for the Fourth of July holiday. U.S. stock trading will reopen Monday.

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© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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