S&P 500, Nasdaq end at records after strong US jobs data

NEW YORK (AFP) - Wall Street stocks surged to fresh records Friday (Aug 5) after a much stronger-than-expected July jobs report suggested the economy is healthier than previously thought.

The broad-based S&P 500 rose 0.9 per cent to 2,182.87, about four points above its prior all-time high set last month.

The tech-rich Nasdaq Composite also set a record, up 1.1 per cent at 5,221.12, while the Dow Jones Industrial Average jumped 1 per cent to 18,543.53, only 12 points from its record.

The Labour Department said the economy added 255,000 jobs in July, easily topping the analyst forecast for an increase of 185,000 payrolls. The department also upwardly revised the employment figures for May and June and said hourly wages rose in July.

“The US economy may not be going gangbusters but it remains the best equity alternative of any worldwide index,” said Michael James, managing director of equity trading at Wedbush Securities.

“The most important takeaway from a better jobs report is an indication of a continued grind higher in the US economy.” The jobs report also boosts the odds of a Federal Reserve interest rate increase this year, but probably not before December, analysts said.

Banking shares rallied on expectations of higher US interest rates. JPMorgan Chase gained 2.7 per cent, Bank of American 3.9 per cent and Citigroup 4.3 per cent.

Technology shares were also generally higher, with Dow members Apple and IBM climbing 1.5 per cent and 1.2 per cent, respectively.

Airlines also rose, with Delta Air Lines winning 3.1 per cent and United Continental 5.5 per cent.

Bristol-Myers Squibb plunged 16 per cent after announcing that a clinical trial of its Opdivo drug to treat lung cancer failed. The news boosted Dow member Merck, which has a competing drug, pushing shares up a hefty 10.4 per cent.

Online travel company Priceline surged 4 per cent after reporting that second-quarter net income rose 12.3 per cent to US$580.6 million (S$781 million) following a 19 per cent rise in overall bookings to US$17.9 billion.

Kraft Heinz jumped 3.8 per cent after reporting second-quarter net income of US$770 million, compared with a loss of US$344 million in the year-ago period.