Upbeat Jobs Data Help Lift Stocks
Stocks surged Friday, ending a choppy week on a positive note, after upbeat jobs data soothed investor jitters about the weak economy.
But Wall Street pros viewed the rally as mostly a sigh of relief that things weren’t looking worse amid persistent worries about the economy and corporate profits, as well as geopolitical concerns.
“Every time there’s a little bit of positive economic news, the market pops, and every time you get a little bit of negative news, the market takes a hit,” said Michael Vogelzang, president of Boston Advisors Inc. “I guess that’s what happens when there are no profits to speak of.”
The Nasdaq composite index climbed 44.30 points, or 3.5%, to 1,295.30, recouping almost all of the loss it took Thursday, when it closed at its lowest level in a month. Chip maker Intel led the advance, gaining $1.11 to $16.22 after trimming its quarterly revenue forecast Thursday by less than many investors had feared.
The Dow Jones industrial average rose 143.50 points, or 1.7%, to 8,427.20, and the Standard & Poor’s 500 index rallied 14.77 points, or 1.7%, to 893.92.
Winners led losers by 8 to 3 on the New York Stock Exchange and by more than 2 to 1 on Nasdaq. Trading was light.
Despite Friday’s rally, the major indexes finished lower for the holiday-shortened trading week, notching their second straight weekly decline. For the week, the Dow was down 2.7%, the S&P; 500 2.4% and Nasdaq 1.5%.
Analysts said Wall Street faces several challenges in the coming weeks.
Worries are mounting about the possibility of a U.S. military attack on Iraq, and the anniversary of the Sept. 11 attacks that devastated Wall Street looms next week.
Questions still swirl around the health of the economy and corporate profits. Crude oil prices near $30 a barrel, although good for producers and other energy companies, could raise costs for consumers and corporate America and hinder the economy’s comeback.
“I still think the general tone of the market is to be cautious,” said James Park, senior equity trader at Brean Murray & Co.
But for the moment, Wall Street basked in the glow of Friday’s jobs report. The government said the nation’s unemployment rate eased to a five-month low of 5.7% in August, while payrolls grew more than expected, suggesting that the economy is crawling forward. The news calmed fears that the fragile U.S. economy could slip back into recession.
“Today’s numbers were a nice positive, and combine that with a mid-quarter update from Intel that was not as bad as expected, and you get a relief rally,” said Joe Seminara, head of trading at Dreyfus Corp.
The news cooled the red-hot Treasury bond market, where yields have plunged in recent weeks as hopes for a strong economic recovery faded. The yield on the benchmark 10-year Treasury note rose to 4.01%, from 3.93% on Thursday.
In commodities trading in New York, oil rose 63 cents to $29.61 a barrel and gold climbed $1.70 to $319.90 an ounce on growing fears of a U.S. strike against Iraq.
In other highlights Friday:
* Intel helped spark a rally in other chip and chip equipment stocks. The SOX semiconductor index rose nearly 5%. Applied Materials, the leading maker of chip production equipment, rose 87 cents to $12.94. Chip gear maker KLA-Tencor jumped $2.08 to $32.04. Other technology giants followed the upward trend. Hewlett-Packard rose 65 cents to $13.50, and Microsoft jumped $1.91 to $47.82.
* Exxon Mobil gained 54 cents to $34.31 as rising oil prices boosted energy stocks. Oil field service giant Schlumberger gained $1.61 to $42.24, and the Amex oil index was up nearly 2%.
* Retailers recovered from a beating Thursday. Circuit City Group, the No. 2 consumer electronics chain, rose $1.44 to $15.69 after it reported that quarterly sales rose 10% at stores open at least a year. Rival and industry leader Best Buy surged $2 to $24.
* Drug maker Pfizer fell $1.18 to $30.75 and topped the Big Board’s most-active list. The company said it would delay seeking regulatory approval for its new epilepsy and anxiety drug while it completes studies relating to its safety.
Market Roundup, C4-5
