Slim Gains for Dow Despite Reports
A report showing the biggest jump in U.S. unemployment in two decades kept a lid on stock prices Friday, although blue chips eked out small gains as investors bet on an economic recovery sometime next year.
“The market is saying, ‘We are looking through the valley of bad earnings and bad economic numbers. We’re betting things will get better,”’ said Tony Rosenthal, portfolio manager at TimesSquare Capital Management Inc.
The Dow Jones industrial average rose 59.64 points, or 0.6%, to 9,323.54, as investors nibbled at blue-chip shares such as home improvement retailer Home Depot, up $1.92 to $40.32, and diversified manufacturer 3M, which rose $1.93 to $108.20. Both trade on the New York Stock Exchange.
The broader Standard & Poor’s 500 index gained 3.10 points, or 0.3%, at 1,087.20. But the technology-laden Nasdaq composite index fell 0.6 point, or 0.03%, to 1,745.73, after rising as high as 1,759.65.
Losers outnumbered winners by almost 5 to 4 on Nasdaq and were about even on the NYSE. Volume was muted.
For the week, the Dow fell 2.3%, the Nasdaq slipped 1.3%, and the S&P; 500 shed 1.6%.
Investors have endured a steady stream of dismal economic news this week.
On Friday, the Labor Department reported that the U.S. economy shed 415,000 jobs in October, the biggest drop since May 1980. The unemployment rate soared to 5.4% from 4.9% in September--the highest jobless rate in nearly five years.
Reports earlier in the week showed that the economy suffered its worst contraction in more than a decade, consumer confidence plunged to a seven-year low, consumer spending fell at its fastest pace in more than 14 years and manufacturing fell into its deepest slump since the 1990-91 recession.
“I’m impressed on balance with the stock market’s strength this week on weaker-than-expected news,” said Clare Zempel, chief investment strategist at Robert W. Baird & Co. “The notion that there was considerable damage in September and October is well-established. It’s not new news.”
Investors were betting that the Federal Reserve will cut interest rates by another half point at its meeting Tuesday after this week’s data showed the devastating effect of the Sept. 11 attacks on the United States. The central bank has cut rates nine times this year.
The day’s biggest gainers included companies that reported estimate-beating earnings or gave upbeat forecasts.
J.D. Edwards surged $1.84 to $9.37 after the software firm said earnings will exceed previous estimates because of increasing licensing fees.
Cigna, the third-largest U.S. health insurer, rallied $8.29 to $79.90. Its earnings were hurt by escalating medical costs and weak retirement plan results, but the numbers beat Wall Street’s expectations.
Computer Sciences jumped $6.14 to $40.08 after it posted earnings that were in line with Wall Street estimates and said future earnings will meet or beat expectations.
In the bond market, yields on long-term U.S. Treasuries rose as the dismal jobs reports boosted prospects for more Fed rate cuts. That prompted investors to take profit from this week’s 30-year bond rally and buy securities with shorter maturities, which are more responsive to rate cuts.
The 30-year bond’s decline left intact about two-thirds of the stellar gains scored Wednesday and Thursday after the Treasury surprised markets with the announcement that it will no longer sell 30-year bonds. The yield on the 30-year T-bond rose to 4.95% from Thursday’s close of 4.80%. The yield on the six-month T-bill fell to 1.95% from 1.99% on Thursday.
In other highlights:
* Microsoft initially added to Thursday’s gain after the Justice Department announced its widely expected antitrust settlement with the software giant. But Microsoft shares, which had rallied 6% on Thursday in anticipation of the news, lost 44 cents to $61.40.
* Exxon Mobil, down 73 cents at $39.76, pressured the Dow as crude oil fell below $20 for the first time in two years amid slackening demand. The oil services index sank 2.9%.
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Market Roundup, C4-5
