Stocks closed higher for a fourth straight day on Wall Street yesterday after a report on hiring provided another encouraging sign that the US economy is emerging from its winter slump.
The Standard & Poor’s 500 index closed at a record high for the eighth time this year. The Dow Jones industrial average also rose above its record closing level during trading, but fell back and finished just short of its first all-time high of the year.
The stock market has turned higher this week after moving largely sideways for most of the year as reports have suggested that the economy is strengthening after slowing down during an unusually harsh winter.
The catalyst yesterday was a private survey that showed US companies increased hiring at a rapid pace last month after a strong manufacturing survey a day earlier.
“In January and February we had that weather weakness and it’s now showing through that ... the underlying economy is fine,” said Jerry Braakman, chief investment officer of First American Trust.
“Economic expansion should continue.”
The Standard & Poor’s 500 index rose 5.38 points, or 0.3%, to 1,890.90. The Dow Jones industrial average climbed 40.39 points, or 0.24%, to 16,573. That is just short of its record close of 16,576.66 set on December 31. The Nasdaq composite rose 8.52 points, or 0.2%, to 4,276.46.
Payroll processer ADP said private employers added 191,000 jobs. ADP also revised February’s job creation up to 153,000 from the 139,000 figure reported earlier. The report comes ahead of the government’s monthly report on jobs, scheduled to be released tomorrow.
Economists are forecasting that US employers added 200,000 jobs in March, according to data provider FactSet. That would be the most since November last year.
“In general, expectations for this Friday’s non-farms payrolls number have clearly risen over the last two weeks,” said Gary Flam, a portfolio manager at Bel Air Investment Advisors.
There was more encouraging news on manufacturing yesterday as the commerce department reported that orders to US factories rose 1.6% in February, the most in five months.
On Tuesday, the S&P 500 gained after the Institute for Supply Management said its manufacturing index rose in March.
Industrial companies were among the biggest gainers in the S&P 500 index yesterday. The sector has risen 2.7% over the last week, as signs have emerged that manufacturing is strengthening, makes it the second-best performer of the 10 industry groups that make up the S&P 500.
After the jobs report tomorrow, investors will turn their focus to corporate earnings, as companies start to report for the first quarter.
First quarter earnings are expected to grow by just 0.4% for the quarter after rising 7.8% in the fourth quarter, according to S&P Capital IQ.
Expectations for the earnings in the first three months are low, in part due to the weather, said Jeff Kleintop, Chief Market Strategist for LPL Financial.
However, investors will be looking for signs that companies are expecting revenues to increase during the remainder of the year.