US markets gain; S&P, Dow end with their strongest weekly performances

The US markets closed higher on Friday, into a record territory after a solid jobs report, leaving the S&P 500 and Dow industrials with their strongest weekly performances since mid-April. Volatility is diminishing, with the VIX trading near an all-time low, as confidence grew that a flood of central-bank monetary stimulus worldwide will propel the global economy, extending the five-year bull market in equities. On the economy front, the number of new US jobs created last month slowed a bit after a big gain in April, but the brisk pace of hiring supports expectations of a spring revival in the economy. The US created 217,000 nonfarm jobs in May. Hiring has topped 200,000 for four straight months, the first time that’s happened in almost 15 years. The robust increase in hiring in May follows a slightly revised 282,000 gain in new jobs in April, 203,000 in March and 222,000 in February. The unemployment rate held steady at 6.3%, following a big drop in April that was the largest one-month decline in 31 years. Besides, US consumer credit growth jumped in April to its fastest pace in almost three years. US consumers increased their debt in April by a seasonally adjusted $26.8 billion. The debt increase in April is well above expectations of a $15 billion gain. Monthly debt rose at a 10.2% annual rate in April, compared with a 7.5% rate in the prior month. This is the strongest rate since July 2011.

Meanwhile, Standard & Poor’s affirmed its ‘AA+’ rating on US long-term unsolicited sovereign credit and an ‘A-1+’ rating on the short term, saying its outlook on the long-term rating remained stable. The ratings agency may also raise the long-term rating to ‘AAA’ if it sees additional evidence of bipartisan efforts that signal a lower degree of political brinksmanship around fiscal policy decisions, coupled with a general government debt burden decline more pronounced than it currently expects.

The Dow Jones Industrial Average was up by 88.17 points or 0.52 percent, to 16,924.28, the Nasdaq Composite added 25.17 points or 0.59 percent, to 4,321.40 and the S&P 500 gained 8.98 points or 0.46 percent, to close at 1,949.44.

The Indian ADRs closed mostly in green on Friday; ICICI Bank was up by 0.81%, Tata Motors was up 0.71%, HDFC Bank was up 0.55%, Dr. Reddy’s Lab was up by 0.53% and Infosys was up 0.37%.