US STOCKS closely sharply higher and the Nasdaq notched an eighth day of gains yesterday as improved labour market and retail sales data raised optimism before today’s critical June payrolls report.
Equities have been on a tear recently as improving economic data and a potential resolution to Greece’s fiscal issues paved over fears of slowing growth and contagion stemming from the Eurozone’s debt crisis.
The Nasdaq’s 8.3 per cent gain over the past eight trading sessions is the most for the index in two years and the S&P’s 6.7 per cent rise is its best since September 2010, when the market reacted to news of the Fed’s second round of stimulus. The Dow is up 6.6 per cent over the same period.
“It’s all about the data today, which was great, and is causing people to revise their outlooks up for tomorrow,” said strategist Jeffrey Friedman at Lind-Waldock in Chicago. “We passed through a resistance level of 1,352 on the S&P, and the next stop after that could be new highs for the year.”
All 10 S&P sectors rose, led by materials, which gained 1.5 per cent, while Freeport McMoRan Copper & Gold climbed 3.7 per cent to $55.49.
Both the S&P retail index and the Dow Jones Transportation Average hit all-time highs.
Data from payrolls processor ADP showed US private-sector employers added 157,000 jobs last month, more than double what was expected. The report, coupled with a fall in new claims for jobless benefits, raised hopes that a recent slowdown in the economy may only be temporary.
The report fueled speculation that Friday’s non-farm payrolls report from the Labor Department would provide more evidence of an improving labour market, a key factor if markets are to rally into the end of the year.
The Dow Jones industrial average shot up 93.47 points, or 0.74 per cent, to 12,719.49. The Standard & Poor’s 500 Index gained 14 points, or 1.05 per cent, to 1,353.22. The Nasdaq Composite Index climbed 38.64 points, or 1.36 per cent, to 2,872.66.
The marke’s rally has some analysts calling for a near-term pullback.
“I can't make a case from this rally that we’re home clear,” said James Meyer of Tower Bridge Advisers in West Conshohocken, Pennsylvania. “We’ve gone from the bottom of the range to the top, and I suspect trading will be choppy around here.”
Retailers were among the best performers after several top companies reported better-than-expected sales gains for June, using bargains to lure shoppers in an uncertain economy.