Wall St scales new peak riding on good jobs report

Wall Street rode improving economic data to fresh records this week, spawning comparisons to July 4th fireworks on the eve of the US Independence Day holiday. The Dow Jones Industrial Average jumped 216.42 points for the 4-day week (1.28 per cent) to 17,068.26, while the S&P 500 increased 24.48 (1.25 per cent) to 1,985.44. Both indices notched closing records three days in a row and the Dow closed above 17,000 for the first time. The gains were also strong on the tech-rich Nasdaq Composite Index, which tacked on 88.00 (2.00 per cent) to 4,485.93. The highlight of the week was Thursday’s Department of Labour employment report, which showed the US economy added a healthy 288,000 jobs in June, while the unemployment rate fell to 6.1 per cent from 6.3 per cent in May. Economists characterized the report as the latest indication of pickup in the US economy after activity plummeted in the first quarter mainly due to unusually cold weather.
- Mixed week for GM -
Most of the week's other economic reports were solid, if unspectacular. The Institute for Supply Management's manufacturing purchasing managers index (PMI) dipped 0.1 point to 55.3 in June, a disappointment next to a forecasted gain of 0.4 point, but well above the 50 reading that separates growth from contraction. Meanwhile, the ISM's PMI for services sector activity fell to 56.0 in June from a strong advance to 56.3 in May, below the 56.5 forecast by analysts. Other data showed a lower US trade deficit in May and a big jump in pending home sales in May. Automakers reported that June sales that were 1.2 percent above last year's level. Alec Gutierrez, a senior analyst at Kelly Blue Book, said the strong auto sales showed consumer confidence was on the rise and likely reflects a decision of some buyers to move up purchases to take advantage of favorable financing conditions before the Federal Reserve raises interest rates. The strong sales were a bright spot for General Motors, which unveiled its plan for paying potentially hundreds of victims millions of dollars in the ignition-switch recall scandal. The US auto giant also announced it was recalling 8.4 million more cars in North America, taking the total number of vehicles recalled in 2014 to roughly 30 million. US banking giant JPMorgan Chase announced that chief executive Jamie Dimon will undergo approximately eight weeks of radiation and chemotherapy treatment for throat cancer. Dimon said his prognosis was "excellent" and would continue working, but the bank assured that it has a succession plan in place. In merger-and-acquisition news, PPG, a supplier of paints, coatings and glass, announced a $2.3 billion acquisition of Mexican company Consorcio Comex in a move to build its presence in Mexico and South America. Devon Energy announced the sale of non-core energy assets in Texas and other sites to Linn Energy for $2.3 billion. Markets next week will turn their attention to second-quarter earnings with reports from Alcoa and Wells Fargo, according to AFP.