Wall Street rallies on upbeat data
By Rodrigo Campos | February 2, 2013 3:14 AM EST
Stocks hit five-year highs on Friday after jobs and manufacturing data showed the economy's sluggish recovery is still on track.
The Dow industrials hit 14,000 for the first time since mid October 2007 and the S&P hit its highest level since December that year. The S&P gained 5 percent last month, its best start to a year since 1997.
Employment grew modestly in January, with 157,000 jobs added in the month, slightly below expectations for 160,000. Still, figures for both November and December were revised upwards.
Separate reports showed the pace of growth in the U.S. manufacturing sector picked up in January to its highest level in nine months, U.S. consumer sentiment rose more than expected last month, and December construction spending came in higher than forecasts.
"All the data seems to keep pointing to a slowly, steadily improving economy," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.
Market sentiment is pointing to weaker bond prices as stocks are moving up, and the economy seems to be confirming that trend, he said.
The Dow Jones industrial average <.DJI> rose 138.31 points or 1 percent, to 13,998.89, the S&P 500 <.SPX> gained 12.26 points or 0.82 percent, to 1,510.37 and the Nasdaq Composite <.IXIC> added 22.82 points or 0.73 percent, to 3,164.95.
With the day's gains, major averages were on track for a fifth straight week of gains. The S&P 500 is also coming off its best monthly performance since October 2011.
Corporate earnings were also in focus, with a trio of Dow components reporting profits that beat expectations.
Drugmaker Merck & Co
Generic drugmaker Perrigo
Of the 252 companies in the S&P 500 reporting earnings so far, 69 percent have exceeded expectations, according to Thomson Reuters data. That is a higher proportion than over the past four quarters and above average since 1994.
Overall, S&P 500 fourth-quarter earnings are estimated to rise 4.4 percent according to the data, up from a 1.9 percent forecast at the start of the earnings season but well below a 9.9 percent profit growth forecast on October 1.
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(Reporting by Rodrigo Campos; Editing by Nick Zieminski)