Stocks, Bonds Buoyed by Job News
Stocks and bond prices rose Friday amid positive news on the economic front, and the dollar gained against foreign currencies as tensions escalated between the U.S. and Iraq.
U.S. job numbers reaffirmed analysts’ convictions that interest rates will hold steady in the near future, making stocks attractive.
The Dow Jones industrial average ended 72.24 points higher at 8,189.49, nearing its Aug. 6 record high of 8,259.31. For the week it rose 282.99 points.
Broader stock indexes also resumed their rally after a one-session stumble Thursday, with the Standard & Poor’s 500 and the New York Stock Exchange composite closing at record highs for the fourth time this week. Computer-related shares boosted the Nasdaq market to its best finish since shortly before the Asia-induced market sell-off in late October.
Thanks to a 500-point rally over the past two weeks, the Dow has quickly transformed an early 1998 slide of more than 4% into a gain of nearly 4%.
Advancing issues outnumbered decliners by a 3-to-2 margin on the NYSE, where trading was heavy but below the four-day streak of 700 million daily volume.
The Standard & Poor’s 500-stock index rose 8.92 points to 1,012.46, and the NYSE composite index rose 3.34 points to 526.31. The Nasdaq composite index rose 17.45 points to 1,694.35
While most of the inspiration behind that rally has been a lack of worrisome developments in Asia or Washington, Friday’s advance was at least partially motivated by a report that the U.S. economy unexpectedly created 358,000 jobs in January, keeping the unemployment rate at an almost 24-year low of 4.7%.
“The employment numbers showed that the economy is still strong” despite the drag of the financial turmoil overseas, said Russ Labrasca, a market analyst at Principal Financial Securities of Dallas, cautioning that “we still need to see Asia play itself out.”
But despite the steady pace of job creation, inflationary pressure on hourly wages remained minuscule. Average hourly earnings rose 0.3%, bringing their overall gain over the year to 3.8%.
U.S. Treasury bond prices rose as traders and investors focused on wages and the expectation that Federal Reserve Board policymakers aren’t likely to increase interest rates any time soon. As the benchmark 30-year Treasury bond rose, its yield was driven down to 5.91% from 5.93% Thursday.
Among Friday’s highlights:
* The Dow’s biggest gainers were J.P. Morgan, up $4.38 to $111.75; Procter & Gamble, up $2.38 to $82; Caterpillar, up $1.88 to $50.75; and Sears Roebuck, up $1.75 to $52.
* Bank stocks rose across the board as investors’ concern about the Asian turmoil waned and earnings expectations grew more optimistic. BankAmerica rose $2.44 to $74.44, and Banc One rose $1.44 to $61.
Chase Manhattan gained $2.38 to $116.94 after reports that the bank plans a reorganization that could involve dismissing up to a third of its 9,400 administrative staff.
* Nasdaq was buoyed by technology bellwethers Oracle, up $3.13 to $27; Intel, up $1.05 to $87.55; and Microsoft, up $2.69 to $158.13.
But Qualcomm slid $8.50 to $47.75 after the maker of wireless-phone equipment warned that second-quarter profits will be below estimates, mainly because of canceled South Korean orders.
* Pixar jumped $5 to $35 after reporting unexpectedly strong quarterly results along with news that Walt Disney will release “Toy Story 2” in theaters instead of directly to video. The first “Toy Story” generated $360 million in revenue and sold more than 22 million videotapes. Disney rose 25 cents to $108.56.
* Decliners included PacifiCare Health Systems, which fell $1.88 to $58.13 after the Santa Ana-based managed health-care services company said its chief financial officer will step down, on a lackluster forecast.
In currency markets, tension in the Middle East helped move the dollar higher against the Japanese yen, to 124.15 yen from 123.43..
