U.S. stock futures rose, indicating the Standard & Poor's 500 Index will climb above its highest close in 18 months, after data showing employers added the most jobs in three years boosted optimism about the economy.
S&P 500 futures expiring in June advanced 0.4 percent to 1,178.60 at 7:18 a.m. in New York. U.S. stock exchanges were closed for Good Friday on April 2, when the jobs report was released. The S&P 500 completed a fifth straight weekly gain on April 1, the longest streak in almost a year. Apple Inc. was little changed today after iPad sales probably beat projections.
Payrolls rose by 162,000 last month, less than forecast, after a revised 14,000 decrease in February that was smaller than initially estimated, figures from the U.S. Labor Department showed on April 2. The March increase included 48,000 temporary workers hired by the government to help conduct the 2010 census. The unemployment rate held at 9.7 percent.
“It's a good, solid report,” Treasury Secretary Timothy F. Geithner said in a Bloomberg Television interview in New York on April 2. “It shows we're getting stronger, and the economy is now creating jobs.”
Futures on the Dow Jones Industrial Average climbed 0.4 percent to 10,899 today, while Nasdaq-100 Index futures added 0.5 percent to 1,961.75.
The S&P 500 rose 1 percent to 1,178.10 last week. The Dow increased 76.71 points, or 0.7 percent, to 10,927.07. Both finished the week at the highest levels in 18 months.
During the first quarter, the S&P 500 rallied 4.9 percent in the biggest advance to start a year since 1998 after U.S. gross domestic product expanded at the fastest pace in six years. Shares in Japan, Sweden, Russia and Switzerland did best during the period among the 20 largest stock markets, with benchmarks rising at least 5 percent. Spain, China, Taiwan and Hong Kong did worst, falling 2.9 percent or more.
Last week's advance extended the S&P 500's rebound from a 12-year low in March 2009 to 74 percent. Birinyi Associates Inc., which recommended
buying stocks a year ago, raised its year-end forecast for the benchmark to 1,325 because of rallies by General Electric Co., Citigroup Inc. and Microsoft Corp.
Apple was little changed at $235.99 in pre-market New York trading. It probably sold more than twice as many iPads in its debut weekend as some analysts estimated. Initial sales may have reached 700,000 units, Piper Jaffray & Co.'s Gene Munster said in an interview yesterday. The analyst had predicted sales of 200,000 to 300,000, while Sanford C. Bernstein & Co.'s Toni Sacconaghi had projected 300,000 to 400,000.
Employers eliminated 8.32 million jobs in the U.S. from January 2008 through October 2009, Labor Department data show. Since then, 117,000 positions have been created.
Caterpillar Inc. is among companies adding staff, indicating the recovery that began in the second half of 2009 is starting to foster the job gains needed to lift consumer spending and sustain the economic expansion. Unemployment may be slow to recede as formerly discouraged employees enter the labor force looking for work, signaling the Federal Reserve will keep interest rates low in coming months.
“There is underlying strength and there are other components here that are also underlying strength, but you still have a 9.7 percent unemployment rate,” Michael O'Rourke, chief market strategist at BTIG LLC, said in a Bloomberg Television interview. “There's still enough weakness there for investors that the Fed's not gonna rush in.”
Last week's report makes it “pretty clear” the deepest U.S. recession since the 1930s has ended, said the head of the group charged with making the call.
“I personally put lots of emphasis on employment,” Robert Hall, who heads the National Bureau of Economic Research's Business Cycle Dating Committee, said in an interview. Among the top indicators the group uses is payrolls, according to its Web site. “I would say ‘pretty clear' is a good description” for whether the economic contraction has ended, he added.
U.S. stocks have risen five consecutive weeks, sending the S&P 500 and Dow Jones Industrial Average to their highest closes in 18 months.
Energy companies led the advance last week as crude oil exceeded $84 a barrel for the first time since October 2008. Commodity producers rallied as a decline in the value of the U.S. dollar lifted prices for gold, copper and aluminum. 3M Co., the maker of 55,000 products from Post-It Notes to respiratory masks, gained after Morgan Stanley said an improved profit forecast from Danaher Corp. was a positive sign.
U.S. companies are sitting on a record pile of cash after spending the lowest proportion of their profits on stock buybacks since 2003, a sign that repurchases may propel the equities rally as earnings recover.
Buybacks by companies in the S&P 500 totaled $137.6 billion last year, or 28 percent of operating profit, according to S&P. The last time the ratio dropped to that level, the S&P 500 subsequently climbed for four years. U.S. firms will almost double their spending on stock repurchases to $235 billion in 2010 as earnings surge, according to Mizuho Financial Group Inc.
S&P 500 companies, excluding financials, that bought their own stock in fiscal 2009 have rallied an average of 7 percentage points more than the index since the start of last year as the purchases reduced the supply available to investors, according to Bloomberg data. More than U.S. 200 companies from PepsiCo Inc. to United Technologies Corp. have announced buyback plans this year, data from Birinyi show.
A private report today may show that service industries expanded in March at the fastest pace since 2007, a sign the U.S. recovery is broadening as the job market turns around.
The Institute for Supply Management's index of non- manufacturing businesses, which make up about 90 percent of the economy, rose to 54, according to the median forecast in a Bloomberg News survey. Readings of 50 signal expansion. Separate data may show fewer Americans signed contracts to buy previously owned homes in February.
