Stocks, Bonds Rebound After Jobs Report : Wall Street: Dollar surges as commodity prices fall. The Dow gains 13.23.
Stocks and bonds staged brisk rallies Friday, as Wall Street ended the day with a favorable view of the May employment report.
A surging dollar and falling commodity prices also gave the markets a lift.
Early Friday, bond yields soared and stocks fell after the Labor Department reported that the nation’s unemployment rate plunged to 6% in May from 6.4% in April.
That raised fears of faster economic growth that might reignite inflationary pressures.
But the bond market’s concerns ebbed as traders took a closer look at the data. The report showed a smaller-than-expected increase in the number of workers added to non-farm payrolls, with only 191,000 new hires in May.
“I don’t know if anyone really believes the unemployment rate,” said Matthew Alexy, bond market strategist at CS First Boston.
In any case, enough buyers returned to bonds in the afternoon to push the yield on the 30-year Treasury bond down to 7.27% from 7.35% on Thursday. Friday’s yield was the lowest since May 19.
Traders said the U.S. bond market continues to attract European money in the wake of wild swings in bond yields on the Continent. Investors there are concerned that interest rates have bottomed, amid signs of economic recovery.
With relative calm in the U.S. market recently, some global investors see U.S. bonds as a better bet now, analysts say.
The flow of money from Europe to the United States was reflected in the surging dollar Friday. In New York, the dollar jumped to 1.670 German marks from 1.654 on Thursday, and to 105.30 Japanese yen from 104.85.
In the stock market, the Dow Jones industrial average ended with a gain of 13.23 points at 3,772.22.
The broad market was stronger than the Dow: Advancing issues outnumbered decliners by about 12 to 7 on the New York Stock Exchange in moderate trading.
For the week, the Dow was up 15.08 points.
Analysts said stocks and bonds were helped Friday by another decline in commodity prices, which further reduced inflation worries. The Commodity Research Bureau index of 21 key commodities tumbled 2.30 points to 232.05.
Soybeans and grain futures dropped as weather forecasts calling for rain in the Midwest growing region eased concern that crops might be threatened. Oil prices also fell, as did gold: Near-term gold futures contracts on the Comex lost $3.50 to $380.70 an ounce.
Among Friday’s stock market highlights:
* Food stocks were broadly higher on analyst upgrades and renewed takeover talk. Kellogg jumped 2 3/8 to 55 5/8 after CS First Boston upgraded the stock to “buy” from “hold,” saying the company should benefit from an improved domestic cereal business.
Other food gainers included General Mills, up 1 1/8 to 56 3/8; Quaker Oats, up 2 1/2 to 70 3/8, and CPC International, up 1 1/8 to 51 1/4.
* Cable TV stocks jumped after Los Angeles Times parent Times Mirror set plans to spin off its cable subsidiary. Times Mirror surged 3 3/4 to 35 3/4, Cablevision Systems rose 2 5/8 to 48 1/4 and Tele-Communications gained 15/16 to 22 7/8.
* On the downside, auto stocks fell as investors reacted to lackluster May sales reports. GM lost 1 1/2 to 52, Chrysler fell 1 to 47 3/4 and Ford eased 3/8 to 56 7/8.
* Retailer Gap tumbled 2 1/8 to 39 7/8 on disappointment over its May sales.
* Some tech stocks were also hit by profit taking. Compaq slid 5 to 112 1/4, Cabletron Systems lost 3 3/8 to 93 5/8 and Texas Instruments sank 2 to 81 7/8.
* IDB Communications again led in volume in Nasdaq trading, falling 5/16 to 8. The company’s stock plunged at midweek after its auditors resigned.
In overseas markets, Frankfurt’s 30-share DAX average ended 18.69 points higher at 2,148.39, while London’s FTSE-100 index gained 17 points to 2,997.8.
In Tokyo, the 225-share Nikkei average fell 54.81 points to 20,954.19. Mexico City’s Bolsa index ended 18.92 points higher at 2,464.98.
Market Roundup, D4
