The benchmark Dow Jones industrial average on Friday closed above 14,000 for the first time since Oct. 12, 2007, as upbeat economic news and strong sales from the auto industry drove retail investors into large-cap stocks.
It was only the sixth time in the history of the widely followed blue-chip index, which closed at 14,009.79, a 1.08 percent gain for the day, that it finished above 14,000.
The Dow Jones industrial average, a price-weighted index, tracks the share prices of 30 large U.S. companies that trade on the New York Stock Exchange or the Nasdaq.
The Dow Jones industrial average reached the milestone after the latest jobs report showed that the U.S. economy added 157,000 in January, broadly in line with the consensus forecast, and the unemployment rate ticked up to 7.9 percent. But the economy added more jobs in 2012 than previously estimated, with a large chunk coming in the final months of the year.
Economists believe this should help soothe any concerns stemming from a report earlier this week of a negative gross domestic product print that the U.S. economy is headed for a recession.
Job gains in November and December were revised up by a combined 127,000. Payrolls increased at a monthly average of 201,000 in the fourth quarter, which suggests the economy was in a pretty healthy state.
For 2012 as a whole, the average monthly jobs gain bounced up to a healthy 181,000, pushing last year ahead of 2011's monthly average of 175,000 new jobs. That’s enough to make 2012 the best year for job growth since 2005.
In addition, after incorporating the annual benchmark revision, the level of payroll employment in March 2012 was revised up by a massive 422,000, suggesting that job growth was roughly 35,000 per month stronger than we previously thought in 2011 and early 2012, Paul Ashworth, chief U.S. economist at Capital Economics, said in a note to clients.
Ford Motor Company (NYSE:F), General Motors (NYSE:GM) and Chrysler LLC, a subsidiary of Italian company Fiat S.p.A. (Milan: F), all reported on Friday double-digit increases in U.S. auto sales for the first month of 2013, the first indication from Detroit that the industry’s post-crisis rebound will continue this year.
General Motors Co. (NYSE:GM), North America’s largest automaker, reported a 16 percent rise in total sales in the first month of 2013, or 194,699 units. The company estimates that January's seasonally adjusted annualized rate will be 15.3 million vehicles.
Retail sales of Chevrolet vehicles, the largest group, rose 11 percent from last year led by robust demand for its mini, small and compact cars. Sales of GMC vehicles were up 23 percent. Pickup truck sales were up 50,230, or 32 percent.
“The year is off to a very good start,” said Kurt McNeil, head of U.S. sales for the Detroit-based auto giant.