Markets & Finance

S&P 500 Tops 1500


The blue-chip benchmark reached its best level since September, 2000, while the Dow industrials hit another record on upbeat economic news

Good news about the economy helped push the Dow Jones industrial average to another peak and the S&P 500 across the 1,500 mark for the first time since September 2000. However, some investors are nervous that tomorrow's nonfarm payroll figures might be disappointing, says Standard & Poor's.

The Dow Jones industrial average rose 29.5 points, or 0.22%, to a new closing high of 13,241.38. The broader S&P 500 index was up 6.47 points, or 0.43%, to 1,502.39. The tech-heavy Nasdaq Composite index added 7.62 points, or 0.3%, to 2,565.46.

Friday's main event is the employment report. April nonfarm payrolls are expected to rise 106,000, and the unemployment rate is expected to rise a notch to 4.5%. "While the surprising payroll jump in March leaves room for an April correction, we expect the report to still be consistent with a tight labor market," says Action Economics.

In economic news Thursday, U.S. nonfarm productivity growth was up 1.7% in the first quarter, after rising 2.1% in in the fourth quarter (revised from 1.6% previously), while unit labor costs dropped to a 0.6% rate vs. the 6.2% bonus-related surge in the fourth quarter (revised from 6.6%). Measured on a year-over-year basis, productivity growth eased to 1.1% from 1.6% previously, with unit labor costs running at a 1.3% pace compared to 3.4% previously. The productivity data are better than expected, while the labor costs are weaker than projected, says Action Economics.

U.S. jobless claims fell 21,000 to 305,000 in the week ended Apr. 28.

And the ISM services index climbed to 56.0 in April as activity picked up after dipping in March where the index was 52.4. The index is better than expected, and has chopped either side of its current 56.1 average since June of last year, says Action Economics.

Among stocks on the move, General Motors (GM) reported a 90% drop in first-quarter net income, but losses narrowed at its core North American region, while revenue fell 16% to $43.9 billion. GM shares dropped 5.4%.

UBS AG (UBS) shares were down 3% after the Swiss bank reported a 6.5% drop in first-quarter profit. The bank also said it will shut Dillon Read Capital Management, a hedge fund run by John Costas, because of large losses.

Symantec (SYMC) said net income for its fourth quarter dropped, but its EPS excluding charges of 24 cents beat analysts' estimate of 20 cents. The security software maker also raised its guidance for its fiscal first quarter.

Activision (ATVI) raised its fiscal year 2007 net revenue forecast to $1.51 billion from its previous outlook of $1.4 billion, citing better-than-expected consumer response to its titles and strength of the video game software market overall.

Talbots (TLB) slashed its previous 36-43 cents first-quarter EPS forecast to 7-11 cents, primarily due to significantly weaker than expected Talbots brand April sales.

Dow Jones & Co. (DJ) took no action at its board meeting Wednesday to discuss the $5 billion bid from News Corp. (NWS).

In the energy markets, June NYMEX crude oil was down 45 cents to $63.23 a barrel.

European stock markets finished higher Thursday. In London, the FTSE-100 index rose 0.8% to 6,537.8. Germany's DAX index was up 0.28% to 7,476.79. In Paris, the CAC 40 index added 0.24% to 6,004.28.

Asian markets also moved up. In Japan, the market was closed for a holiday. In Hong Kong, the Hang Seng index climbed 1.44% to 20,681.58.

Treasury Market

Treasury yields moved up as the drumbeat of better than expected manufacturing and services data over the past couple sessions was complimented by the plunge in jobless claims ahead of Friday's payrolls data, says Action Economics. The 10-year yield rose to 4.674%.

McCormack is senior producer for BusinessWeek.com's Investing channel.

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