Wall Street Extends Rally
Wall Street capped a stellar week by extending its rally for a ninth straight session, as a better-than-expected employment report boosted stocks and gave investors hope that the economy was strengthening.
U.S. payrolls grew by 337,000 jobs in October, nearly double what Wall Street had expected.
The strength of the Labor Department figures, which included upward revisions of the August and September figures, allowed investors to overlook an unexpected jump in the unemployment rate to 5.5% from 5.4% in September.
Still, some investors feared that an increase in wages flowing into the economy could trigger inflation. That prompted a sell-off in the bond market, with the yield on 10-year notes soaring to 4.17%, up from 4.07% on Thursday. Investors grew increasingly certain that the Federal Reserve would raise interest rates this month and next to combat the inflationary pressure.
“You absolutely have to have Fed action both months now,” said Doug Sandler, chief equity strategist at Wachovia Securities.
“The saving grace for the economy this year has been no inflation, and a big component of that is wages. When there are more wages, inflation becomes a factor. We haven’t seen it yet, but it becomes a concern that the Fed will have to face.”
The Dow Jones industrial average rose 72.78 points, or 0.71%, to 10,387.54, its highest close since June 30.
Broader stock indicators were moderately higher. The Standard & Poor’s 500 index was up 4.50 points, or 0.39%, to 1,166.17, surpassing Thursday’s mark, which had been the highest close for the index since March 19, 2002.
The Nasdaq composite index gained 15.31 points, or 0.76%, to 2,038.94, its best close since June 30.
Advancing issues outnumbered decliners by nearly 5 to 4 in active trading on the New York Stock Exchange.
The Dow has been up in eight of the last nine sessions, while the S&P; 500 and Nasdaq enjoyed nine straight gains, buoyed by lower oil prices, President Bush’s election victory and the employment report.
For the week, the Dow gained 3.59% -- its best week since March 25, 2003 -- while the S&P; rose 3.18% and the Nasdaq climbed 3.24%.
Investors were further pleased by crude oil futures, which -- for now -- appear to have stabilized below $50 a barrel.
Oil for December delivery, which fell $2.06 a barrel Thursday, rose 79 cents Friday to settle at $49.61 in New York trading.
Among Friday’s market highlights:
* The dollar, battered by high oil prices and the U.S. budget deficit, fell to an all-time low against the euro as European political leaders indicated that they had no plan to stem its rise. The euro was at $1.296 in late New York trading, topping its previous peak of $1.292 set in February.
The weaker dollar now buys only about three-quarters of a euro -- which helps U.S. exports but cuts the spending power of American travelers in Europe. The euro and the dollar were about equal in value when the European currency debuted five years ago.
* Gold extended its rally, rising $3.50 to $433.60 an ounce, a fresh 16-year high, on the New York spot market. The dollar’s decline is boosting gold’s appeal as an alternative investment.
* Sears Roebuck surged $8.70 to $45.88 after Vornado Realty Trust said it had acquired 4.3% of its shares. Vornado owns office buildings and shopping centers, and analysts saw the deal as not only a vote of confidence in Sears but also as a way to help the retailer move away from shopping malls, which have been declining in popularity.
* VaxGen of Brisbane, Calif., rose $2.44 to $16.79 after the drug maker said it had won an $877.5-million contract to supply the U.S. government with anthrax vaccine.
* Google slumped $15.35 to $169.35 after a UBS analyst said the Internet search engine was “on a collision course with Microsoft.” Microsoft climbed 31 cents to $29.31.
* Univision Communications slumped $4.01 to $28.79 for the biggest decline in the S&P; 500. The Spanish-language TV and radio broadcaster said after the market closed Thursday that fourth-quarter earnings would fall below Wall Street estimates.
