NEW YORK (USA TODAY) - It's been a day of fresh milestones on Wall Street, with the Dow Jones industrial average topping 15,000 for the first time in history and the Standard & Poor's 500 index making its first foray above the 1,600 level.
Following a far better-than-expected number on job creation last month, the benchmark Standard & Poor's 500 stock index rallied above the 1,600 level Friday to another record high, eclipsing that psychologically important milestone for the first time.
Traders are breathing a little easier "that the sky is not yet falling on the U.S. economic expansion," says Scott Anderson, chief economist at Bank of the West.
The bullish reaction to the strong jobs number was evident in a sharp rise in the Dow, which was up as much as 175 points in early trading.
"It's been a long time coming," says Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, noting that it took "13 years, one month and 11 days" for the S&P 500 to climb the 100 points from 1,500 to 1,600.
"The payroll number was a surprise to the upside," says Steven Ricchiuto, chief economist at Mizuho Securities USA.
Wall Street, which had been expecting only 148,000 jobs to be created last month, got 165,000 instead, and must now adjust their investment outlook. They had been betting that the economy and jobs market were weakening after some less-than-stellar economic data in recent weeks.
"The better-than-expected 165,000 increase in non-farm payrolls in April, combined with the 114,000 upward revision to the gains in the preceding two months, will go a long way toward soothing fears of another spring slowdown," says Paul Ashworth, chief U.S. economist at Capital Economics.
If there's one negative to today's strong jobs report, it is that it could prompt the Federal Reserve to dial down its easy-money policy earlier than expected, Ashworth said. "With the unemployment rate edging down to a four-and-a-bit-year low of 7.5%, the Fed may yet begin to slow the pace of its asset purchases sometime in the second half of the year."
Even so, "we remain fully invested in U.S. stocks," said David Kotok, chief investment officer at Cumberland Advisors, who favors growth stocks over defensive shares. "We think the U.S. stock market is headed higher."
JOBS: Economy adds 165K jobs in April, jobless rate falls to 7.5%
Ahead of the April employment report, stock index futures were flat. After the better-than-expected announcement, futures took off, and when trading opened, stock prices followed.
BONDS: April jobs report good for stocks, bad for bonds
On Thursday, the Dow rose 0.9% to 14,831.58. The S&P 500 index rose 0.9% to 1,597.59. The Nasdaq composite index climbed 1.3% to 3,340.62.
STOCKS: S&P flirts with 1,600 level
A separate report from the Labor Department on Thursday showed that applications for unemployment benefits fell last week to the lowest level in more than four years.
Markets in Japan were closed for a public holiday on Friday. Elsewhere in Asia, stock market advanced. Hong Kong's Hang Seng rose 0.22% to 22,718.76.
An interest rate cut by the European Central Bank gave markets in Europe a small lift Thursday. The central bank, which sets interest rates for the 17 European Union countries that use the euro, cut the rate by a quarter of a percentage point to a record low of 0.5%. Markets across the region were trading in a narrow range on Friday.
Benchmark oil for June delivery rose 44 cents to $94.43 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.96, or 3.3%, to finish at $93.99 a barrel on the Nymex on Thursday, the biggest one-day gain for crude since November.