Dow rockets past 17,000 on hiring fireworks
The stock market’s rally has taken place even as a tepid economy has failed to lift the incomes of many Americans.
The New York Times
The stock market, continuing a remarkable ascent that began in the darkness of the last recession, surged past a milestone Thursday after a strong jobs report indicated the economy might finally be gaining steam.
The Dow Jones industrial average broke through 17,000 for the first time. It closed at 17,068.26, up 92.02 points, or 0.5 percent.
The broader Standard & Poor’s 500 stock index, finished the day within striking distance of 2,000, closing up 10.82 points, or 0.5 percent, at 1,985.44, a record.
The S&P 500 is nearly three times higher than its low point in 2009, when the economy was in free fall and the government was scrambling to shore up the financial system. When adjusting for inflation, however, the S&P 500 is still below its peak in 2000.
The market’s rally has taken place even as a tepid economy has failed to lift the incomes of many Americans. The economy unexpectedly shrank in the first quarter, which some attributed to a new uncertainties in health-care spending from implementation of the Affordable Care Act.
Still, there are signs economic growth is starting to pick up. The stock-market records were set after the government announced Thursday that the economy had added 288,000 jobs in June, more than analysts had been expecting.
“While the economy has been slower than people would have liked, there are signs that it has continued to improve,” said Shep Perkins, a portfolio manager at the Putnam Global Equity Fund. “You could see the S&P at 3,000 in three to four years.”
But some investors question whether the stock market can hold onto its gains.
One of the most surprising features of this bull market is that it has taken place during a drawn-out period of economic sluggishness. During the extended rallies of the 1990s and the 2000s, the economy grew at about 3 percent a year, double the growth rate during the latest ascent.
And not all investors are convinced that growth is poised to accelerate. The mood in the bond market, for instance, is circumspect. The yields on bonds have fallen this year, indicating investors believe the Fed will have to keep interest rates low to prevent the economy from stalling.
“This demonstrates that bond investors are skeptical about the economic recovery,” said Timothy Ghriskey of Solaris Asset Management. “And rightly so, because we saw a weak economy in the first quarter.”