NEW YORK – Steady growth in hiring last month sent the stock market sharply higher Friday.
The 175,000 jobs added by U.S. employers last month was just what investors wanted. The number suggested that the economy is growing, but not so strongly that the Federal Reserve will pull back from its economic stimulus soon.
“This was, in our view, very much a ‘Goldilocks’ number,” said Phil Orlando, chief equity strategist at Federated Investors. “There is zero chance that the Federal Reserve is going to start tapering monetary policy” at its next two-day policy meeting starting June 18. The central bank is buying $85 billion of bonds every month to keep interest rates low and encourage borrowing, spending and investing in riskier assets like stocks.
The Standard & Poor’s 500 index rose 20.82 points, or 1.3 percent, to 1,643.38. The Nasdaq composite rose 45.16 points, or 1.3 percent, to 3,469.22. Nine of the 10 industry groups in the S&P 500 index rose, led by consumer discretionary stocks, which stand to benefit more than other sectors if the economy picks up. Industrial companies and banks also posted strong gains.
The only S&P 500 industry group that fell was telecommunications, a so-called defensive sector that investors favor when they are seeking safety and high dividends.
Financial markets have turned volatile over the past two weeks as traders parse comments from Fed officials for hints about when the central bank will cut back on its support. When it happens, the wind-down will help nudge interest rates higher.
For investors who expect the Fed to stay the course, “these types of slow economic growth reports speak to that,” said Kevin Mahn, chief investment officer at Hennion & Walsh Asset Management. “It keeps interest rates at record lows, and it keeps the equity markets humming.”
The S&P 500 index is down 1.6 percent since reaching a record high May 21. The next day, Fed Chairman Ben Bernanke said the Fed could ease up on its economic stimulus program in one of its next few meetings.
In government bond trading, the yield on the 10-year Treasury note rose to 2.18 percent from 2.08 percent late Thursday as investors moved out of safer assets.
• Gap rose $1.11, or 2.7 percent, to $42.09. The clothing store chain reported late Thursday that its sales jumped 7 percent in May, more than expected, helped by strong results at its namesake Gap and Old Navy stores.
• TiVo plunged $2.61, or 19 percent, to $11.10 after the company settled patent disputes with several technology companies, including Cisco and Motorola Mobility but received far less than what most investors inspected. TiVo has posted annual losses in nearly all of the past 10 years.
• Thor Industries rose $4.92, or 11.9 percent, to $46.16 after the company reported a 6 percent increase in income. The results beat market expectations on stronger sales of RVs and a lower tax rate.