Dow finishes at highest since 2008, Nasdaq at highest since 2000
Stocks surged around the globe Friday, thanks to a pair of good reports on the U.S. economy, sending the Dow Jones industrial average to the highest level since May 2008.
Hope on Wall Street that the economy continues to improve also sent the technology-heavy Nasdaq composite index to its highest level since the heady days of the technology boom in 2000. And at least some of that enthusiasm was fueled by investor hype over Facebook’s upcoming initial public offering.
The numbers put the post-Lehman Bros. collapse firmly in the rear-view window. The Dow closed up 156.82 points, or 1.2%, at 12,862.23. The Nasdaq rose 45.98 points, or 1.6%, to 2,905.66.
Both indexes rose for the first time above the highs reached last April and July, after which they were hurt by concerns about a possible double-dip recession in the United States and a European financial collapse.
Stocks were pushed up Friday by new signs that the U.S. economy — and the employment situation —- are on the mend. The day began with one of the most promising employment reports in a long time, showing that the economy added 243,000 jobs, or 100,000 more than economists were expecting. That was enough to bring the unemployment rate down to 8.3% from 8.5%.
Investors also cheered data that showed the U.S. service sector was growing faster than expected, according to a closely watched index from the Institute for Supply Management.
Together the reports were some of the strongest evidence to date that the U.S. economy is recovering faster than economists anticipated, and quickly enough to justify the market’s recent steady upward climb.
“Last year the wave of optimism quickly faded, much like it did the year before,” Steve Ricchiuto, an economist at Mizuho Securities, said in a note to clients Friday, referring to the stock market sags that followed surges in 2010 and 2011. “This time, though, we are less confident in that view and recognize that things have gotten somewhat better.”
The Nasdaq and Standard & Poor’s 500 index have both risen for the last five weeks. The S&P 500 index ended Friday up 19.36 points, or 1.5%, at 1,344.90, which is just below the highs reached last year.
Investors willing to take more risks sold their U.S. Treasury bonds, sending the yield on the 10-year bond up from 1.82% to 1.92%, the sharpest rise this year.
The clearest threat to the rally is the European economic situation. But while the relationship between Greece and the European Union has been up in the air, the continent’s broader problems have been quiet recently.
“Our base case remains policymakers doing enough to keep the euro intact, but there is a ‘fat tail risk’ of a disorderly breakup,” economists at Nomura Global Economics wrote Friday.
Leading stock indexes closed up 1.7% in Germany and 1.8% in England.
