“The round numbers are psychologically important, especially for those cautious investors sitting with their cash on the sidelines,” said Jack Ablin, chief investment officer at BMO Private Bank.
Ablin said stocks could continue moving higher as those investors chase performance.
Many individual investors who missed out on the rally of the past few years have been drawn back in as stocks hit new highs. There is also a lack of alternatives for investors who hope to earn more than the meager rate on U.S. Treasuries. (Waiting for the bond bubble to pop)
“I’ll call it a momentum effect,” said Ablin.
Friday’s gains came on the back of jobs data that was not too bad, not too good, but just right.
The U.S. economy added 165,000 jobs in April, according to the government’s latest report. The unemployment rate dipped to 7.5% from the prior month’s rate of 7.6%.
Both numbers were better than expected, easing concerns about a summer slowdown in the economy. But the unemployment rate still remains well above the level at which the Federal Reserve has said it will take the market’s punch bowl away.
“Conditions are still less than ideal, but the economy continues to grind forward and progress is being made,” said Jim Baird, chief investment officer for Plante Moran Financial Advisors.
The jobs data, which came after a string of disappointing reports this week, overshadowed less encouraging economic data released Friday.
Factory orders fell 0.4% in March, according to the Census Bureau. The report was worse than expected and came after a 1.9% drop in February. The Institute for Supply Management said its index of activity in the services sector fell in April, but remained above the level indicating growth.