Strong Economic Data Boosts Stocks To New Highs

The market got more good news this morning in the form of better than expected economic data. The important May payrolls report came in above consensus estimates, with a gain of 157,000 jobs last month.

There were also some other positive datapoints, in the form of the ISM Index coming in better than expected (55.0 vs. 54.7), and the core PCE inflation guage coming in below expectations (+0.1%). This latter point is important, in that lower inflation pressures would allow the Fed to cut rates sooner.

Bond yields are reacting to the news by moving higher, with the 10-year yield hitting 4.94% and closing in on the psychological 5.0% level, which it has not seen since August 2006. The dollar is also doing well, getting a bounce vs. both the Yen and the Euro.

Retail stocks are strongest group so far this morning, along with energy stocks. Healthcare and utilities are lagging.