Stocks rose on Friday after a report on February payrolls from the U.S. Labor Department smashed expectations and fed optimism for a stronger economy ahead.
The S&P 500 closed at 1551.18, up 6.92 points or 0.5 per cent, bringing the index to within 1 per cent of a record high. The blue-chip Dow Jones Industrial Average closed at 14,397.07, up 67.58 points or 0.5 per cent – marking its fourth record-high close in as many days. In Canada, the S&P/TSX composite index closed at 12,835.61, up 9.09 points or less than 0.1 per cent.
Before trading began, the Labor Department reported that payrolls expanded by 236,000 in February – nearly double the previous month’s gains and well ahead of expectations for 165,000 gains. The unemployment rate fell to a four-year low of 7.7 per cent, from 7.9 per cent.
The report not only suggested some healing in the U.S. labour market, but also hinted that the economy as a whole could be performing better than expected.
Bill Gross, managing director of PIMCO, the world’s largest bond fund, told Bloomberg Television that he has raised his expectations for U.S. economic growth this year to 3 per cent, after inflation. That’s up from a forecast in December for growth of just 1.25 per cent to 1.75 per cent.
Key U.S. financials fell, though, following the release of much-anticipated stress test results from the Federal Reserve on Thursday, after markets closed: 17 of the 18 largest financials passed the tests, suggesting they have enough capital to survive a sharp economic downturn. The results could pave the way toward bigger dividends when announcements are made next week.
Yet, Bank of America Corp. fell 1.5 per cent and JPMorgan Chase & Co. fell 1 per cent.
McDonald’s Corp. rose 1.6 per cent after reporting that its February sales in stores open for at least one year fell 1.5 per cent – but nonetheless topped expectations.
Among key commodities, crude oil rose 39 cents (U.S.) to $91.95 a barrel. Gold rose $1.80, to $1,576.90 an ounce. Suncor Energy Inc. was unchanged, while Barrick Gold Corp. fell 0.4 per cent.
SNC-Lavalin Group Inc. fell 6.2 per cent after it reported a 25 per cent gain in quarterly earnings and a 14 per cent gain in revenues. However, the engineering firm forecast an earnings gain of 10 to 15 per cent in 2013, below expectations.