Dow Soars 42.50 as Government’s Job Figures Ease Inflation Fears
Stock prices rose sharply Friday to some of their highest levels since last October’s crash as the Dow Jones industrial index jumped 42.50 points in heavy trading that reflected a surge in the bond market.
The strong gains were sparked by the government’s September employment report that showed job growth was modest during the month, cooling inflation concerns.
Blue chip stocks led the way as the Dow index pushed up to 2,150.25, compared to the post-crash high of 2,158.61 reached July 5.
For the week, the average rose 37.34 points.
Some other, broader measures of market trends surpassed their July peaks--for example, the New York Stock Exchange’s composite index of all its listed common stocks, which was up 2.88 at 156.81.
Advancing issues outnumbered declines by nearly 3 to 1 in nationwide trading of NYSE-listed stocks.
Volume on the floor of the Big Board came to 216.35 million shares, against 153.57 million in the previous session.
Unemployment Drops
“This has been an awfully impressive performance,” said Michael Metz of Oppenheimer & Co. But he added that it is not clear whether the recent holdouts, both fund managers and the buying public, would be drawn back into the market.
Before the opening, the Labor Department reported that the unemployment rate dropped to 5.4% in September from 5.6% the month before.
But at the same time the agency said non-farm payroll employment grew by 255,000 jobs, a bit less than the consensus estimate on Wall Street. The employment growth figure for August was revised downward.
Wall Street took the news as an indication that a widely discussed resurgence of strong economic growth might not be taking place, leaving the Federal Reserve in a position to hold off on any further tightening of credit.
“The employment report needs to be kept in context,” said Merrill Lynch analyst Bruce Steinberg. “The gain still implies faster growth than is consistent with stable inflation.”
The hourly earnings index rose a steep 0.5%, he said, with the jobs gain fairly rapid, and if sustained would lead to even tighter labor markets and more inflation pressure in the months ahead.
“These data are not unambiguously strong or weak, and do not provide a concrete case either way for a change in Fed policy,” said Peter Greenbaum, an analyst at Smith Barney, Harris Upham & Co.
Interest rates fell in the credit markets. Prices of long-term government bonds rose by $16.87 for each $1,000 in face value, lowering their yields to 8.79% from 8.94%.
Among actively traded blue chips, International Business Machines rose 2 to 116; Eastman Kodak, 1 3/8 to 47 5/8; Sears Roebuck, 1 to 40 1/2; Exxon, 1 1/8 to 45 1/2, and General Electric, 1 1/8 to 44.
Japanese issues rebounded from some recent selling, aided by an upturn in the Tokyo stock market. Honda gained 4 3/8 to 152 1/2 and Matsushita 6 to 180 1/2.
Intel dropped 1 3/4 to 24 7/8 in heavy over-the-counter trading, registering disappointment among investors over the size of the third-quarter earnings gain reported by the company. Also, Intel said it was anticipating a slight decline in profits for the fourth quarter from the July-September period.
The Wilshire index of 5,000 equities closed at 2,754.554, up 44.260 from Thursday.
Standard & Poor’s industrial index rose 6.51 to 319.17, and S&P;’s 500-stock composite index was up 5.68 at 278.07.
The NASDAQ composite index for the over-the-counter market edged up 0.52 to 385.67. At the American Stock Exchange, the market value index closed at 303.82, up 2.68.
In foreign trading, a last-minute buying surge left Japanese shares higher at the close after staying on the minus side for most of the day. The Nikkei 225-share index rose 85.93 points to 27,258.27.
In London, shares closed higher, helped by the Wall Street rally. The Financial Times 100-share index for the London market ended up 5.8 points at 1,844.7.
