Wall Street enjoyed a broad-based rally on Friday as two key stock indexes rose to the highest levels since before the Great Recession, propelled by better-than-expected employment data released earlier in the day. The strong upward movement by stocks suggests that investors are gaining confidence in the U.S. economic recovery and putting money back to work in the equity markets.
The Dow Jones Jones Industrial, an index of America’s largest blue-chip companies, rallied to its highest level in nearly four years, while the tech-heavy Nasdaq exchange soared to the highest level in 11 years. Among the big gainers for the day: big U.S brand names stocks like Bank of America, Caterpillar, Alcoa and FedEx.
Friday’s gains helped push the S&P 500 to its fifth straight positive week, and the index’s strongest start since 1989, according to Bloomberg.
Earlier on Friday, The Bureau of Labor Statistics said January’s unemployment rate fell to 8.3% from 8.5% in December as the economy added 243,000 jobs, a much better result than the 125,000 to 150,000 jobs that many analysts had been expecting. Professional and business services added 70,000 jobs, while the manufacturing sector increased by 50,000. The construction sector, meanwhile, added 21,000 new jobs.
“In this economy only one variable matters right now and that variable is employment,” Lawrence Creatura, an equity portfolio manager at Federated Investors told the AP. “This report was great news. It was beyond all expectations, literally. The number (243,000 hired in January) was higher than even the highest forecast.
The Dow hit its highest point since May 2008 and the Nasdaq rose to its highest level since December 2000.
After the jobs report, there was further good news on the economic front. The Institute for Supply Management reported that non-manufacturing activity — which measures service sectors like hotels and restaurants — rose sharply to 56.8% in January from 53% in December. Meanwhile,the Commerce Dept. reported that factory orders rose 1.1% in December on a surge in orders for heavy machinery, a very good sign for the manufacturing sector.
The Dow closed Friday’s trading at 12,862.23, an increase of 1.23%. The Nasdaq finished up 1.61% to 2,906.66.