Dow average tops 17,000 as payrolls rise

Markets await details of ECB stimulus plans

Jul 3, 2014 @ 9:52 am

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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 prepared to disclose details of its stimulus plans.

The Dow gained 42.70 points, or 0.3 percent, to 17,018.94 at 9:31 a.m. in New York. The Standard & Poor's 500 Index (SPX) rose 0.3 percent to 1,980.56. Equities markets close at 1 p.m. today before the Independence Day holiday.

“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.”

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 8.8 percent since reaching a two-month low in April as central bank stimulus spread from Europe to Japan and the U.S.

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 and Draghi said the ECB will announce more details later today.

“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. “That will be an adrenaline shot to the overall markets.”

(Bloomberg News)

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