Adam Shell and Kim Hjelmgaard, USA TODAY
New York, NY -- 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.
In afternoon trading, the Dow was up 1.1% at about 14,989, the S&P 500 was 1.2% higher at about 1,616, and the tech-laden Nasdaq composite index was up 1.3% at around 3,384. The index was trading at its highest levels in more than 12 years.
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. In afternoon trading, the Dow was back below 15,000.
"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 1,000 points have come a lot faster for the Dow. It first closed above the 14,000 level in July of 2007.
"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."
As stock prices soared, bond prices plunged. The benchmark 10-year U.S. Treasury yield, which moves inversely to the price, jumped to 1.75% Friday, up from a 2013 low of 1.62% two days ago.
In Europe, benchmark indexes jumped after the jobs report release. Britain's FTSE 100 index finished up 0.9% to 6,521.46. Germany's DAX 30 index ended up 2% to 8,122.29. And France's CAC 40 index closed 1.4% higher to 3,912.95.
On Thursday, the European Central Bank's interest-rate cut boosted stock prices. 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 0.5%.
Benchmark oil for June delivery rose $1.69 to $95.68 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.
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.
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 markets advanced. Hong Kong's Hang Seng rose 0.2% to 22,718.76.