U.S. Stocks Climb to Record as Jobs Growth Tops Forecasts

U.S. stocks rose, sending the Dow Jones Industrial Average briefly above 15,000 for the first time, as employment picked up more than forecast in April and the jobless rate unexpectedly declined to a four-year low.

Caterpillar Inc. and Alcoa Inc. rallied more than 1.9 percent to pace the Dow. Kraft Foods Group Inc. increased 5.1 percent as profit beat estimates. American International Group Inc. climbed 5.7 percent as operating earnings surpassed projections. LinkedIn Corp. tumbled 13 percent after forecasting sales that missed analysts’ predictions.

The Standard & Poor’s 500 Index advanced 1.1 percent to 1,614.42 at 4 p.m. in New York, topping 1,600 for the first time. The Dow gained 142.38 points, or 1 percent, to 14,973.96 after earlier climbing as high as 15,009.59. More than 6.4 billion shares changed hands on U.S. exchanges, in line with the three-month average.

“This is an outstanding jobs report,” Darrell Cronk, the New York-based regional chief investment officer at Wells Fargo Private Bank, which oversees $170 billion, said by phone. “The data is strong enough to confirm that the expansion is intact, and the bones of this recovery are where they need to be.”

Payrolls expanded by 165,000 workers last month following a revised 138,000 increase in March that was larger than first estimated, Labor Department figures showed today in Washington. The median forecast of 90 economists surveyed by Bloomberg projected a 140,000 gain. Revisions to the prior two months’ reports added a total of 114,000 jobs to the employment count in February and March.

The jobless rate dropped to 7.5 percent, the lowest level since December 2008, from 7.6 percent in March.

Economic Data

Other reports today showed orders placed with U.S. factories fell more than forecast in March as a cooling economy slowed demand for metals, mining equipment and military goods. The Institute for Supply Management’s non-manufacturing index decreased to 53.1 in April from 54.4 a month earlier, the Tempe, Arizona-based group said.

Concern over a slowdown in the world’s largest economy had increased as a report May 1 showed manufacturing expanded in April at the slowest pace this year. Data last week indicated the U.S. economy grew less than forecast in the first quarter.

The euro-area economy will contract more than previously expected in 2013, the European Commission said in new forecasts today. Gross domestic product in the 17-nation region will fall 0.4 percent this year, compared with a February prediction of a 0.3 percent drop, the Brussels-based commission said.

Fed Stimulus

Stocks rose yesterday as the European Central Bank cut its key interest rate and U.S. jobless-benefit claims unexpectedly fell. The Federal Reserve said May 1 it will keep buying bonds at a monthly pace of $85 billion while standing ready to raise or lower purchases as the economy changes.

The benchmark U.S. equities gauge has advanced 2 percent this week. The U.S. bull market has entered its fifth year as the S&P 500 surged 139 percent from a 12-year low in 2009, driven by better-than-estimated corporate earnings and three rounds of bond purchases by the Fed.

Berkshire Hathaway Inc. is among 12 S&P 500 companies posting results today. Of the 404 that have reported profit so far, 73 percent exceeded analysts’ earnings predictions while 53 percent missed on sales, data compiled by Bloomberg show. Profit at S&P 500 companies rose 2 percent in the first three months of the year, according to estimates compiled by Bloomberg.

“Nobody has been happy with top line growth for a while,” James Kee, president at South Texas Money Management in San Antonio, Texas, said in a phone interview. His firm oversees about $1.9 billion. “What we’ve seen on the top line is pretty consistent with what we’ve seen in the underlying economy, that is low, but positive private sector growth.”

Volatility Index

The Chicago Board Options Exchange Volatility Index, or VIX, slid 5.5 percent to 12.85 as investors cut demand for protection against losses in the S&P 500. The benchmark gauge for options has fallen 29 percent this year.

Eight of the 10 S&P 500 industry groups rose as companies whose earnings are most tied to economic swings led the gains. Commodity and industrial shares climbed more than 1.7 percent.

The Morgan Stanley Cyclical Index surged 2 percent and the Dow Jones Transportation Average jumped 2.1 percent. Both the Russell 2000 Index of small companies and the S&P Midcap 400 Index reached record highs, rising 1.6 percent and 1.3 percent, respectively.

Caterpillar, the biggest maker of mining machinery, advanced 3.2 percent to $86.98. Alcoa, the largest U.S. aluminum producer, added 1.9 percent to $8.62.

Kraft Earnings

Kraft Foods Group, the grocery business spun off from Kraft Foods Inc. in 2012, rose 5.1 percent to $53.11 after reporting first-quarter earnings of 76 cents a share, including a restructuring charge of 12 cents a share. That exceeded the average analyst projection of 64 cents. It also reiterated a full-year earnings forecast of about $2.75 a share.

AIG, the insurer that repaid a bailout last year, climbed 5.7 percent to $44.52, the highest in more than two years, as results improved at the property-casualty operation. First-quarter operating profit, which excludes some investment results, was $1.34 a share, topping the 88-cent average forecast of 19 analysts surveyed by Bloomberg.

Gilead Sciences Inc. rose 5.7 percent to a record $55.15 on optimism over potential sales for the company’s experimental hepatitis C medications.

The world’s biggest maker of AIDS medicines reported first-quarter profit that missed analysts’ estimates on declining sales of its HIV drugs. Weakness in HIV product sales should be “temporary,” Jim Birchenough, an analyst with BMO Capital Markets wrote in a note.

Regeneron, AMD

Regeneron Pharmaceuticals Inc. surged 7.1 percent to $266.16, extending a record. The maker of the eye medicine Eylea reported first-quarter profit that topped analysts’ estimates and increased its U.S. sales forecast for the drug. The stock has risen 24 percent since it started trading as a member of the S&P 500 on May 1.

Advanced Micro Devices Inc. climbed 5.6 percent to $3.60, extending its gain since April 26 to 36 percent, the biggest weekly increase since 2002. The company’s gaming business potential is underestimated, Mark Lipacis, an analyst with Jefferies LLC, wrote in a note yesterday.

Fourth-quarter sales could reach $2 billion should AMD chips be used in the next versions of Sony Corp.’s PlayStation devices and Microsoft Corp.’s Xbox, Lipacis said. Analysts in a Bloomberg survey estimated $1.3 billion, on average.

Debt Sales

Moody’s Corp. added 3.6 percent to $62.75, the most since June 2007. The second-largest credit rater reported first-quarter profit that beat analysts’ forecasts on demand for company ratings. Earnings have risen for three straight years as companies take advantage of record-low interest rates to sell unprecedented amounts of debt.

CBOE Holdings Inc. jumped 3.3 percent to a record $38.75. The biggest U.S. options market by volume beat analyst projections for first-quarter profit amid growth in its volatility and S&P 500 products.

LinkedIn tumbled 13 percent, the most since August 2011, to $175.59. The biggest online professional-networking service forecast sales that trailed analysts’ estimates, raising concern that mobile advertising will be slow to kick in.

Teradata Corp. slid 4.5 percent to $50.65 for the biggest drop in the S&P 500. The data-storage company said 2013 earnings excluding some items will be at the lower end of its previously projected range of $3.05 to $3.20 a share. Analysts on average had forecast $3.10.