Stocks surge on better news
NEW YORK. stocks soared Friday as Wall Street cheered the positive news it had been hoping for: Job losses slowed in April and big bank...
NEW YORK. stocks soared Friday as Wall Street cheered the positive news it had been hoping for: Job losses slowed in April and big banks don't need as much capital as some had feared. All the major indicators rose more than 1 percent, including the Dow Jones industrial average, which jumped 150 points.
Bank shares helped drive the gains following the release of the government's "stress tests" late Thursday. Energy stocks surged as oil prices jumped on the improving economic outlook.
Wall Street welcomed the Labor Department's report that employers cut 539,000 jobs last month — the fewest in six months and much less than the 620,000 analysts had expected.
The jobs report also said the unemployment rate climbed to 8.9 percent — the highest since 1983 — from 8.5 percent as many businesses refrained from hiring amid an uncertain economic outlook.
"The news is never all good when you've hit bottom," said Alan Skrainka, chief market strategist at Edward Jones. "But that doesn't change our view that the rate of decline is slowing."
In late afternoon trading, the Dow rose 151.02, or 1.8 percent, to 8,560.87. The Standard & Poor's 500 index rose 17.50, or 1.9 percent, to 924.89, and the Nasdaq composite index rose 17.30, or 1 percent, to 1,733.54.
Investors also were relieved that the results of the government's "stress tests" of the 19 largest U.S. banks were not worse than anticipated. Ten of them will need to raise about $75 billion in new capital as a buffer against losses if the economy worsens.
"Getting past the stress tests was a milestone," said Jim Dunigan, managing executive of investments for PNC Wealth Management. "That was a cloud hanging over our head for the past several months. The good news is there were no surprises."
Shares of banks surged, even of those which have to raise more money. Citigroup Inc. rose 26 cents, or 6.8 percent, to $4.07, and Bank of America Corp. rose 57 cents, or 4.2 percent, to $14.08. Regional bank Fifth Third Bancorp soared $3, or 56 percent, to $8.35.
The stress tests found that BofA needs the most capital of its peers: $33.9 billion. The bank plans to raise about $17 billion in capital in the coming weeks, and plans an additional $10 billion in asset sales.
"If anything, the market is reading this more as a sign of approval than a bad sign for the weaker banks," said Jim Sinegal, equity analyst at Morningstar.