Jobs Report Powers Dow Above 9,600
The stock market closed out the first week of the new year with another rally Friday, as news of strong job growth sent many industrial stocks soaring.
But the same news triggered a jump in Treasury bond yields, as investors bet the Federal Reserve is sure to refrain from further interest rate cuts.
On Wall Street the Dow Jones industrial average closed up 105.56 points, or 1.1%, at a record 9,643.32, boosting the blue-chip index’s rise for the week to 5%.
Internet stocks, the focus of massive speculation in recent months, had another extraordinary session, with many of the shares swinging wildly during trading and closing sharply higher.
That helped boost the Nasdaq composite index 18.32 points, or 0.8%, to a record 2,344.41. For the week the index surged 6.9%--on top of its nearly 40% rise last year.
“People were predicting a pretty slow economy in 1999,” said Robert Freedman, executive vice president of John Hancock Funds. “Now money managers think earnings will be better than expected, and they’re nervous about not having money in the market when it’s moving up.”
Optimism about the economy, fueled by the government’s report of greater-than-expected job growth in December, lifted many of the industrial firms that would have the most to gain from robust economic growth.
GM, for example, surged $2.50 to $80.06, rail giant CSX leaped $1.75 to $44.88 and machinery maker Caterpillar gained $2.06 to $51.
In the broad market, winners topped losers by 23 to 18 on Nasdaq in heavy trading. But winners had only a thin edge on the New York Stock Exchange.
Still, for the week NYSE winners topped losers by 20 to 15.
As stocks rose Friday, the bond market suffered on worries that interest rates may have to rise if the economy is stronger than expected. The 30-year Treasury bond yield rose to a seven-week high of 5.27% from 5.22% on Thursday and from 5.10% a week ago.
The bond market also was pressured by the dollar’s continued weakness against the yen. The dollar eased to 110.93 yen in New York, from 111.04.
But the dollar gained against the euro, which fell to $1.155.
In foreign trading, Brazil’s stock market sank 2.5% amid ongoing worries about the country’s troubled economy. The Mexican stock market also fell, losing 0.7%.
For Wall Street, however, the week’s powerful advance is a good omen for the year: Historically, a rising market in the first week of the year portends a full-year gain.
Among Friday’s highlights:
* Industrial shares also got a boost from Alcoa, which leaped $7.88 to $85.13 after the aluminum giant reported strong quarterly earnings. Corporate earnings season kicks into high gear next week.
Steel stocks, meanwhile, gained after the Clinton administration proposed tax relief for the import-challenged industry. Nucor soared $3.19 to $49.81.
* Other industrial winners included Ford, up $3.19 to $65; Weyerhaeuser, up $4.44 to $55.38; PPG Industries, up $2.50 to $63.50.
* Bank and financial stocks were helped by the economic news. American Express surged $3.19 to $108.06 and BankAmerica added $2.38 to $69.94.
* The Internet sector had a wild session, even by is frenzied standards. Online bookseller Amazon.com rose to $199.13, fell back to $152, then closed at $160.25, up $1.38 for the day.
Other gainers included Yahoo, up $23.63 to a record $343.63; GeoCities, up $14 to $54.88; Go2Net, up $10.88 to $66; and Lycos, up $20.25 to $91.75 after its chief executive said the company will surpass Yahoo in the number of users visiting its Web site.
* On the downside, investors sold shares of consumer products stocks that are considered the best bets in a slow-growth economy. Losers included Eli Lilly, down $3.50 to $78.88; Coca-Cola, off $1.44 to $68; and Procter & Gamble, down $1.69 to $89.19.
Market Roundup, C4
* MARKET SWINGS: Traders will meet Monday to discuss ways to reduce Nasdaq volatility. C3
