Stocks and bonds surged around the world after a report showed that wage growth slowed in the United States last month, reassuring investors that interest rates won't go much higher in the world's largest economy.
The employment report pointed to continued growth with low inflation in the United States, even as economies elsewhere pick up.
"Put it all together and you still have the world's finest environment for stocks," said Alan Day, who helps manage $4 billion in stocks and bonds for the Stratevest Group in Burlington, Vt.
The Nasdaq composite index jumped 67.85, or 2 percent, to 3520.63, crossing the 3500 level just 22 days after topping 3000 for the first time. The Nasdaq is up 61 percent in 1999, on course for the biggest annual gain in its 28-year history.
The Standard & Poor's 500-stock index, a popular vehicle for index funds, rose 24.26, or 1.7 percent, to 1433.30, topping a record set Nov. 18. The Dow Jones industrial average rose 247.12, or 2.2 percent, to 11,286.18, within 40 points of an Aug. 25 closing record and on target for its best year since 1996.
Europe's eight largest stock markets all gained, and benchmark indexes in Germany, Britain, Spain, Sweden and France set records.The biggest rise came in Germany, where the benchmark DAX stock index rose 3.2 percent, its biggest gain since March 12. The Dow Jones Stoxx 50 index of European stocks climbed 102.54, or 2.4 percent, to a record 4437.39, and advanced 2.1 percent for the week.
Latin American stocks rose on expectations that economic growth will boost earnings, sending indexes in Brazil and Mexico to records.
U.S. Treasury bonds posted their biggest gains in five weeks. The price of the benchmark 30-year bond rose $8.12 1/2 per $1,000 invested, and its yield fell to 6.25 percent, from 6.31 percent late Thursday.
Computer shares, including International Business Machines Corp., led the gains on Wall Street, together with a bond-fueled rally in financial shares including Citigroup Inc.
"People keep waiting for some terrible news that will cause this market to backtrack, but everything is positive," said Buck Newsome, managing director at Cincinnati-based Cambridge Financial Group Inc. "We are optimistic about the upside potential going into the next millennium."
Contributing most to the Dow's advance, Hewlett-Packard Co. rose 7 1/8, to 107-1/16; IBM gained 6-47/64, to 112, after Kurt King, a Banc of America Securities analyst, said a sales slowdown related to year 2000 preparations will soon pass; and J.P. Morgan & Co. rose 4 1/8, to 136 5/8.
The Dow average rose 2.7 percent this week, and the S&P 500 added 1.2 percent. The Nasdaq composite climbed 2.1 percent, the seventh in a series of weekly gains that have driven the index up 29 percent since Oct. 15.
The unexpectedly small increase in wages last month pushed interest rates lower, encouraging investors to buy bank stocks.
The Philadelphia KBW Banks Index surged 2.8 percent. Citigroup rose 3-3/16, to 57-3/16; Chase Manhattan Corp. climbed 2-15/16, to 82; and Bank of America Corp. gained 1-1/16, to 57-7/16.
"The report is good for stocks directly because it says that companies don't have to worry about fighting wage pressures," said Robert Morris, a money manager at Lord, Abbett & Co.
Average hourly wages rose 0.1 percent, less than the 0.3 percent economists expected, even as the unemployment rate held at a 29-year low of 4.1 percent.