Stocks rise as jobs report stokes hopes for low interest rates

U.S. stocks rose Friday as investors found some positive aspects in a middling employment report. Job growth slowed in August, and traders hope that will persuade the Federal Reserve to wait before raising interest rates.

Stocks started the day with big gains following the Labor Department’s job report. Energy companies rose more than the rest of the market as oil prices broke out of a four-day slump. The gains were broad, but the stocks that rose the most were utilities, which would stand to benefit if interest rates remain low.

Kate Warne, investment strategist for Edward Jones, said the jobs report was good but not great. That actually helped send the market higher because a very strong report could have pushed the Fed to raise interest rates as early as this month. Some investors fear that could jeopardize an uneven economic recovery.

“It falls right in the sweet spot of what the market wanted,” Warne said. “It wasn’t so strong as to make [higher interest rates] seem necessary but it wasn’t so weak as to make a rate increase this year unlikely.”

The Dow Jones industrial average rose 72.66 points, or 0.4%, to 18,491.96. The Standard & Poor’s 500 index advanced 9.12 points, or 0.4%, to 2,179.98. The Nasdaq composite climbed 22.69 points, or 0.4%, to 5,249.90.

U.S. benchmark crude oil rose $1.28, or 3%, to $44.44 a barrel. Brent crude, the benchmark for international oil prices, advanced $1.38, or 3%, to $46.83 a barrel. U.S. crude had fallen 9% over the last four days. Anadarko Petroleum shares climbed 5.5% to $56.49 and Chevron ticked up 0.7% to $100.93.

Utilities made even bigger gains. They’re seen as steady investments, and their high dividends make them more appealing when bond yields are low. NextEra Energy climbed 1.8% to $123.13 and American Electric Power rose 1.3% to $65.24.

Household goods makers also traded higher. Colgate-Palmolive, which makes toothpastes, soaps and pet foods, rose 0.8% to $74.89. Tyson Foods, the largest meat and poultry processing company in the world, rose 1.3% to $76.44. Cigarette makers also did well, as Reynolds American and Altria Group gained ground.

Carnival Corp. and Royal Caribbean Cruises both skidded. Morgan Stanley analyst Jamie Rollo said demand for cruises seems to have weakened in August and bookings for late 2016 and early 2017 have slowed. He downgraded Carnival shares to “underweight” and they slid 4.7% to $46.39, the biggest loss on the S&P 500. Royal Caribbean fell 3.7% to $70.01.

Healthcare companies missed out on the gains as drug makers fell. Democratic presidential candidate Hillary Clinton announced a plan Friday that’s intended to give the government more power to resist increases in the price of older drugs. Mylan fell 4.7% to $39.97 as legislators questioned the company’s rebate payments to Medicare. Mylan stock has dropped 18% in the last two weeks as the company has been criticized for repeatedly raising the price of its EpiPen allergy injection. Mallinckrodt fell 4.2% to $72.42.

Lululemon sank 10.6% to $68.57 after the maker of athletic apparel reported disappointing sales. Its forecast for the rest of the year also failed to inspire investors.

California companies making big moves included VeriFone Systems, which dived 16.4% to $16.81 after the San Jose maker of terminals for electronic payments announced disappointing sales and cut its revenue forecast for the year.

Bond prices fell. The yield on the 10-year U.S. Treasury note rose to 1.61% from 1.57%. The dollar rose to 103.94 yen from 103.32 yen and the euro edged down to $1.1159 from $1.1197.

Wholesale gasoline rose 3 cents to $1.30 a gallon. Heating oil rose 3 cents to $1.41 a gallon. Natural gas remained at $2.79 per 1,000 cubic feet.

Gold rose $9.60 to $1,326.70 an ounce. Silver rose 42 cents, or 2.2%, to $19.37 an ounce. Copper edged up less than 1 cent to $2.08 a pound.

The FTSE 100 in Britain jumped 2.2% and France’s CAC 40 rose 2.3%. In Germany, the DAX climbed 1.4%. Japan’s benchmark Nikkei 225 index finished nearly flat. South Korea’s Kospi rose 0.3% and Hong Kong’s Hang Seng rose 0.5%.

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UPDATES:

2:35 p.m.: This article was updated with additional information.

1:15 p.m.: This article was updated with the close of markets on Wall Street.

7:45 a.m.: This article was updated with more recent market information.

This article was originally published at 6:55 a.m.