Dow Jones Soars Above 17,000 on Strong Jobs Report

The yield on 10-year Treasuries climbed three basis points to 2.66 percent.

The Dow Jones Industrial Average climbed above 17,000 for the first time as data showed employers added more workers than projected in June and the European Central Bank disclosed details of its stimulus plans. Salem-News.com File Photo

(NEW YORK) - The Dow Jones Industrial Average climbed above 17,000 for the first time as data showed employers added more workers than projected in June and the European Central Bank disclosed details of its stimulus plans.

Goldman Sachs Group Inc. and MetLife Inc. advanced at least 1.5 percent, pacing gains among banks and insurance companies. Paccar Inc. added 5.1 percent amid speculation that the maker of Kenworth and Peterbilt trucks may receive takeover interest from Volkswagen AG. PetSmart Inc. jumped 12 percent after Jana Partners LLC disclosed a new activist stake. Lululemon Athletica Inc. gained 3.8 percent after a report that the yoga-wear company has explored a buyout by a private-equity firm.

The Dow gained 71.09 points, or 0.4 percent, to 17,047.33 at 10:20 a.m. in New York. The Standard & Poor’s 500 Index rose 0.3 percent to a record 1,980.95. Trading in S&P 500 stocks was 7.8 percent above the 30-day average during this time of the day. Equities markets close at 1:00 p.m. today before the Independence Day holiday. The yield on 10-year Treasuries climbed three basis points to 2.66 percent.

“This is a pretty strong report,” said Jim Paulsen, chief investment strategist at San Francisco-based Wells Capital Management, in a phone interview. “This is stuff that is going to lead to upward revisions of second quarter growth rates and it starts off the third quarter in a real positive momentum place.”

Jobs Report:

The addition of 288,000 jobs followed a 224,000 gain the prior month that was bigger than previously estimated, Labor Department figures showed today in Washington. The median forecast in a Bloomberg survey of economists called for a 215,000 advance. The jobless rate is the lowest since September 2008. The number of long-term unemployed fell to 3.1 million, showing they’re having greater success finding work.

Benchmark indexes are at record levels as stocks extended a rebound from a selloff earlier this year that started with biotechnology and small-cap stocks. The S&P 500 has rallied 9.1 percent since reaching a two-month low in April as central bank stimulus spread from Europe to Japan and the U.S.

Central Banks:

Fed Chair Janet Yellen said last month that accommodative monetary policy, rising property and equity prices and the improving global economy should lead to above-trend growth. The Fed has kept its benchmark rate near zero since December 2008.

ECB President Mario Draghi reiterated that he’ll keep interest rates low as officials try to revive the region’s economy with a new round of emergency measures.

“The key ECB interest rates will remain at present levels for an extended period of time,” Draghi said at a press conference in Frankfurt after policy makers left borrowing costs unchanged.

Today’s meeting was the first after the central bank unveiled a range of measures last month to fight the threat of deflation in the euro area. Investors have been waiting for more information on how the plan will work.

“All eyes should be focused not on the jobs number, but on what Mario Draghi says,” Chad Morganlander, a money manager at St. Louis-based Stifel, Nicolaus & Co., which oversees about $160 billion, said in a phone interview.

Financials Rally:

Seven of 10 main industries in the S&P 500 advanced. Financial firms were the biggest gainers, rallying 0.7 percent. Life insurers like Lincoln National Corp. and MetLife benefit from climbing bond yields, which allow them to invest clients’ premiums and maturing securities at higher interest rates.

MetLife added 2.3 percent to $57.38 and Lincoln National increased 2.1 percent to $53.31. Goldman Sachs added 1.5 percent to $169.44 for the biggest advance in the Dow.

Paccar rose 5.1 percent to $67.05. Volkswagen spokeswoman Christine Ritz said by telephone that the largest European carmaker “clearly denies” an interest in bidding for the Bellevue, Washington-based company. Sanford C. Bernstein & Co. analyst Max Warburton said in a note that Wolfgang Bernhard, chief of the truck unit at Daimler AG, said at an event yesterday with analysts that Volkswagen may bid for Paccar.

PetSmart jumped 12 percent to $67.18. Jana, the $10 billion hedge-fund firm run by Barry Rosenstein and known for pushing corporate managements to make changes, acquired about 9.9 percent of PetSmart in stock and options, and “expects to have discussions” with management, the board and other investors, according to a regulatory filing.

Going Private:

Lululemon rose 3.8 percent to $42.98. Advisers to founder Chip Wilson have been talking to private-equity firms, including Leonard Green & Partners LP, about taking the company private, the Wall Street Journal reported, citing people familiar with the situation. The newspaper reported on June 22 that the Vancouver-based company is working with Goldman Sachs Group Inc. on options including shaking up the board and partnering with a buyout firm.

Cree Inc. added 5.2 percent to $52.92. The maker of energy-efficient lighting products was raised to outperform, the equivalent of a buy, from market perform, or hold, at Oppenheimer & Co.

Source: Bloomberg