U.S. stocks rose Friday, with the Dow industrial average and the Standard & Poor’s 500-stock index closing at records, after the May payrolls report provided the latest confirmation of improving economic conditions.
The Chicago Board Options Exchange Market’s Volatility Index (VIX), Wall Street’s so-called fear gauge, ended down 8.1 percent at 10.73, its lowest level since February 2007. The VIX, which tends to rise when volatility increases or the market drops, has been on the decline for months and is well below its historical average of 20, which some see as a sign that investors are ignoring concerns that could derail the rally.
The day’s gains were broad and led by cyclical sectors, which outperform in times of economic expansion. Industrial shares jumped 1 percent while energy shares rose 0.8 percent. The only S&P sector that fell was health care, a defensive group, down 0.1 percent.
The Dow rose 88.17 points or 0.52 percent, to 16,924.28; the S&P gained 8.98 points or 0.46 percent, to 1949.44; and the Nasdaq Composite added 25.17 points or 0.59 percent, to 4321.40.
With the day’s gains, the S&P marked its sixth record close in the past seven sessions.
For the week, the Dow rose 1.2 percent; the S&P, 1.3 percent; and the Nasdaq, 1.9 percent.
Securities regulators filed civil lawsuits Friday against a private trading platform and a major brokerage firm, citing both cases as part of an agency crackdown on violations of core equity market structure rules.
In the first case, the Securities and Exchange Commission charged New York-based trading platform Liquidnet with improperly using its subscribers’ confidential trading information to market its services. The company is paying a $2 million penalty to settle the charges without admitting or denying them. Liquidnet is a so-called dark pool operator. Dark pools are alternative trading systems that match buyers and sellers without publishing quotes. They compete with exchanges but are less transparent.
In the second case, the SEC charged Los Angeles-based brokerage firm Wedbush Securities and a current worker and a former employee with a slew of violations, stemming from allegedly giving anonymous foreign traders access to the U.S. equities markets without having proper risk controls in place.
“Both of these cases involve enforcement actions of rules designed to ensure that investors receive the protection that they expect and deserve in the context of the current equity market structure,” SEC Enforcement Director Andrew Ceresney told reporters Friday.
● In a loss for the Securities and Exchange Commission, a federal jury found the former chief executive of sTec not liable for trading on inside information ahead of a secondary stock offering. Manouchehr Moshayedi, a co-founder of the computer storage device company, was cleared of engaging in insider trading on nonpublic information about a major customer’s drop in demand for a key product, enabling him and his brother to reap about $260 million. The case was one of the largest U.S. insider-trading enforcement actions to go to trial.
● General Motors is recalling more than 89,000 automobiles because of air-bag defects and other problems. The automaker said Friday that it is recalling 31,520 Buick Verano and Chevrolet Camaro, Cruze and Sonic cars because the air bags might not deploy. GM says at least one person was hurt in a related crash. GM is also recalling 57,512 other vehicles, including the Chevrolet Silverado LD and the GMC Sierra LD, because the base radio that sounds a warning if the key is in the ignition when the driver’s door is opened may not work. Since February, GM has recalled 2.6 million cars because of an ignition-switch problem that the company says is linked to at least 13 deaths.
● The International Monetary Fund’s headquarters may one day shift to Beijing from Washington, aligning with China’s growing influence in the world economy, the fund’s managing director said. Christine Lagarde, speaking in London, said IMF rules require the main office be in the country that is the biggest shareholder, which the United States has been since the fund was formed 70 years ago.
● Hertz Global Holdings said it would restate or correct financial results for the past three years to fix accounting errors originating in 2011, sending the car rental company’s shares down as much as 11.5 percent. First-quarter results are likely to be below market estimates because of costs related to the accounting review, the No. 2 U.S. car rental firm said in a regulatory filing that signaled further possible financial adjustments ahead.
— From news services