Dow soars 100 to recordAssociated Press
NEW YORK -- The Dow Jones industrial average rolled toward 7,900 today, tacking on more than 100 points as the latest economic data validated the rosy outlook among many investors.
The Dow rose 100.43 to 7,895.81 for its first close above 7,800. The blue-chip barometer rose 208.09 for the holiday-shortened week, and has now gained nearly 1,500 points, or 22.5 percent, on the year.
Advancers led decliners by a 5-to-2 margin on the New York Stock Exchange, where volume was heavy at 374.66 million shares by the market's early 1 p.m. close.
Broader stock measures also hit new highs after a Labor Department report showing that upward pressures on employment costs -- the leading force behind inflation -- remained mild in June.
The Standard & Poor's 500 list jumped 12.89 to 916.92, the NYSE index rose 5.98 at 477.69, and the Nasdaq index rose 12.00 to 1,467.61, with all three setting new highs for the second straight day. The American Stock Exchange composite rose 4.28 to a record 634.34.
The jobless data jibed with yesterday's verdict by Fed policy-makers, who apparently decided that inflationary pressures aren't severe enough for the central bank to slow the economy with higher interest rates.
Bonds rallied after the employment report, sending long-term lending rates to their lowest level since February. The benchmark 30-year Treasury bond rose a full point after the report, sending its yield down almost to 6.62 percent from 6.71 percent late yesterday.
"The Fed got it right by not raising rates in May and not raising rates yesterday," said Alan Skrainka, chief market strategist at Edward Jones of St. Louis. "The news out of the employment report is that the economy continues to grow at a pace that is consistent with low inflation and strong earnings growth."
The Labor Department report showed that the nation's unemployment rate rose to 5 percent in June, up from a 24-year low of 4.8 percent in May. Job creation was slower than expected, wages rose only modestly, and hours worked declined.
Earlier in the year, Fed officials were concerned that the strong job market and rising consumer confidence would give workers the upper hand, forcing employers to boost wages -- and prices -- as they try to keep up with demand.
"Most industries have been indicating that productivity has been improving more than enough to offset any increase in compensation. That's an outstanding situation," said Abby Joseph Cohen, chief market strategist at Goldman Sachs.
Financial services companies, whose lending businesses thrive when interest rates aren't rising, were among the market's biggest gainers for the second straight day.