Business Excellence Awards
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By Inyoung Hwang and Lu Wang
NEW YORK - U.S. stocks rose, sending the Dow Jones Industrial Average above 15,000 for the first time, as employment picked up more than forecast in April and the jobless rate unexpectedly declined to a four-year low.
Caterpillar Inc. and General Electric Co. rallied more than 2.3 percent to lead the Dow. Kraft Foods Group Inc. increased 5.9 percent as first-quarter profit beat estimates. American International Group Inc. climbed 5.8 percent as operating earnings surpassed projections. LinkedIn Corp. tumbled 9.1 percent after forecasting second-quarter sales that missed analysts’ predictions.
The Standard & Poor’s 500 Index rallied 1.3 percent to 1,617.65 at 10:44 a.m. in New York, topping 1,600 for the first time. The Dow advanced 174.98 points, or 1.2 percent, to 15,006.56. Trading in S&P 500 stocks was 15 percent above the 30-day average during this time of day.
“This is an outstanding jobs report,” Darrell Cronk, the New York-based regional chief investment officer at Wells Fargo Private Bank, which oversees $170 billion, said by phone. “The data is strong enough to confirm that the expansion is intact, and the bones of this recovery are where they need to be.”
Payrolls expanded by 165,000 workers last month following a revised 138,000 increase in March that was larger than first estimated, Labor Department figures showed today in Washington. The median forecast of 90 economists surveyed by Bloomberg projected a 140,000 gain. Revisions to the prior two months’ reports added a total of 114,000 jobs to the employment count in February and March.
The jobless rate dropped to 7.5 percent, the lowest level since December 2008, from 7.6 percent in March.
Other reports today showed orders placed with U.S. factories fell more than forecast in March as a cooling economy slowed demand for metals, mining equipment and military goods. The Institute for Supply Management’s non-manufacturing index decreased to 53.1 in April from 54.4 a month earlier, the Tempe, Ariz.-based group said.
Concern over a slowdown in the world’s largest economy had increased as a report May 1 showed manufacturing expanded in April at the slowest pace this year. Data last week indicated the U.S. economy grew less than forecast in the first quarter.
The euro-area economy will contract more than previously expected in 2013, the European Commission said in new forecasts today. Gross domestic product in the 17-nation region will fall 0.4 percent this year, compared with a February prediction of a 0.3 percent drop, the Brussels-based commission said.
The S&P 500 climbed to a record yesterday as the European Central Bank cut its key interest rate and U.S. jobless-benefit 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.
The benchmark U.S. equities gauge has advanced 1 percent this week. The U.S. bull market has entered its fifth year as the S&P 500 surged 139 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases by the Fed.
Berkshire Hathaway Inc. is among 12 S&P 500 companies posting results today. Of the 404 that have reported profit so far, 73 percent exceeded analysts’ earnings predictions while 53 percent missed on sales, data compiled by Bloomberg show. Profit at S&P 500 companies rose 1.1 percent in the first three months of the year, according to estimates compiled by Bloomberg.
“Nobody has been happy with top line growth for a while,” James Kee, president at South Texas Money Management in San Antonio, Texas, said in a phone interview. His firm oversees about $1.9 billion. “What we’ve seen on the top line is pretty consistent with what we’ve seen in the underlying economy, that is low, but positive private sector growth.”