Jobs Report Is a Shot in the Arm for Stocks
Stocks bounced back Friday, setting new highs, as a strong economic report soothed worries about this week’s profit warnings by Intel and Motorola--just in time for yet another warning from a major technology company.
The Dow Jones industrial average posted its biggest point gain in a month, rising 125.06 points to 8,569.39, about 15 points shy of Tuesday’s record close of 8,584.83. The rally wiped out Thursday’s 95-point slide and left the Dow with a gain of 23.67 for the week.
Broader stock indexes also repaired most of Thursday’s damage: The Standard & Poor’s 500 and the New York Stock Exchange composite resumed their record-setting march after a two-session slump, and the technology-heavy Nasdaq composite recovered most of Thursday’s 2.7% plunge.
In other markets, crude oil prices fell to four-year lows, bond prices were higher, and the dollar was mixed.
The stock rebound came despite Thursday’s discouraging forecast from Motorola, the second profit warning in as many days from a blue-chip technology name. On Wednesday, Intel announced that first-quarter sales of its semiconductors have been weak, prompting concerns about slack demand for personal computers and, perhaps, in the overall economy.
Thanks to the continued economic growth suggested by Friday morning’s robust reading on February employment, investors managed to shrug off the dire pronouncements from Intel and Motorola after just one day.
But on Monday, the mood may sour just as quickly when most investors get their first chance to react to a profit warning late Friday from Compaq Computer, the leading producer of personal computers.
“It’s rather amazing that there’s been such immunity to adverse news. Clearly, these are high-profile companies that are reporting problems in basic parts of their business,” said Ned Riley, chief investment officer at BankBoston.
The Labor Department reported Friday that the economy created a surprising 310,000 jobs in February, pushing the nation’s unemployment rate back down to a 24-year low of 4.6%.
Bonds stumbled after the report--which poses an inflationary risk if the strong job market forces employers to pay higher wages. But bonds soon rebounded to push interest rates lower and provide additional support for stocks.
The key 30-year bond price rose, which lowered its yield to 6.02% from Thursday’s close of 6.07%.
Advancing issues outnumbered decliners by a nearly 3-to-1 margin on the NYSE, where volume totaled 665.50 million shares, up from Thursday’s 651.93 million.
The S&P; 500 rose 20.64 points, or 2%, to 1,055.69, blowing past Tuesday’s record high of 1,052.02. The NYSE composite index rose 9.33 points to 549.64, beating Tuesday’s record of 546.89.
The Nasdaq composite index, which tumbled nearly 48 points on Thursday, rose 41.57 points, or 2.4%, to 1,753.49.
The Russell 2,000 index of smaller companies rose 6.90 points to 463.72, less than 2 points from its first record high since before late October’s sell-off.
Among Friday’s highlights:
* Thursday’s big Nasdaq decliners led the rebound: Intel, which plunged nearly $11 Thursday, rose $2.50 to $78.13; Dell Computer rose $6.63 to $138.50, recovering most of Thursday’s $7 slide. In late trading on other markets, however, Dell surrendered that entire rebound after the announcement by PC rival Compaq. Prior to announcing a flat profit forecast, Compaq rose 50 cents to $27.63, but in the after-hours market fell to $25. Motorola, meanwhile, fell $2.88 to $53.
* The Dow’s big gainers were Merck, up $3.69 to $127.38; Procter & Gamble, up $2.94 to $83.63; and Philip Morris, up $2.13 to $44.69.
* Telecom shares gained as investors sought refuge from the market’s volatility in firms with no exposure to Asia. Bell Atlantic rose $3.06 to $95.31; SBC Communications gained $2.50 to $77.63.
In commodities trading, crude oil prices tumbled, closing below $15 a barrel for the first time in four years as the growing world oil glut weighed on the market. At the New York Mercantile Exchange, crude oil for April delivery closed at $14.91 a barrel, down 42 cents on the day.
Overseas, Tokyo’s Nikkei stock average rose 1.7%, Frankfurt’s DAX index rose 2% and London’s FTSE-100 rose 1.5%.
Market Roundup, D4
* HIGH-TECH TROUBLES
Compaq is the latest computer firm to warn of lower quarterly profits. D2
