US shares hit another high on jobs data

THE US dollar rose against the yen and euro yesterday and US stocks closed at a new record as the outlook for the US economy continued to brighten following last week’s strong jobs report.

Financial shares led the way on Wall Street, with Bank of America up 5.2 per cent after it reached a settlement with bond insurer MBIA.

The euro fell against the greenback after European Central Bank President Mario Draghi said the bank, which cut interest rates last week, is watching economic data and is ready to take further action if needed.

Purchasing managers indexes yesterday showed recession dragged on Eurozone companies and business growth flagged in China, adding to a report on Friday that US corporate growth slowed in April.

Many analysts have expected a pullback in US equities for weeks now, as the S&P 500 index continues to post historic highs. Wall Street has largely avoided a correction as traders have used weakness as an opportunity to add to long positions.

Yesterday’s gains follow a strong run in stocks since the start of the year. Accommodating monetary policies that have kept interest rates low, as well as solid earnings, have helped lift the S&P 500 13.5 per cent so far this year.

US employment rose more than expected in April, with 165,000 jobs created, and hiring was much stronger than thought in the previous two months, the US government said on Friday. The report eased concerns raised by other data that had pointed to the US economy losing steam.

The Dow Jones industrial average fell 5.07 points or 0.03 per cent, to end at 14,968.89, the S&P 500 gained 3.08 points or 0.19 per cent, to 1,617.5 and the Nasdaq Composite added 14.34 points or 0.42 per cent, to 3,392.97.