Payroll News Sparks Rally on Wall Street
Stocks rocketed Friday, lifting blue-chip indexes to their highest levels in almost four years, as investors reacted to a report of job growth that was solid enough to signal economic strength but not so robust as to stoke inflation fears.
The Dow Jones industrial average zoomed 107 points as it and the broader Standard & Poor’s 500 index closed at heights not seen since mid-2001.
The market rally came in spite of another uptick in the price of crude oil, which rose 21 cents to $53.78 a barrel in New York trading.
Traders cited the Labor Department’s job report for February, which showed that U.S. payrolls grew by 262,000 -- better than economists expected but far from a stunner.
“It was not a blowout number that would make people go, ‘Oh my gosh, the [Federal Reserve] is going to have to step on the brakes to stop inflation,’ ” said Jay Wong, portfolio manager at investment firm Payden & Rygel in Los Angeles. “It affirmed that we’re growing at a moderate clip, which is good for equities.”
What’s more, the February report indicated that wages remained stable, which traders took as a signal that the Fed would be able to continue with its pace of “measured,” quarter-point interest rate hikes.
The Dow rose 107.52 points, or 1%, to 10,940.55. The S&P; 500 rallied 11.65 points, or 1%, to 1,222.12. The technology-heavy Nasdaq composite gained 12.21 points, or 0.6%, to 2,070.61.
Small stocks took part in the broad rally, as the Russell 2,000 index of lesser-known names climbed 1%, nearing its all-time peak reached in late December.
The Dow Jones transportation average soared 1.9% to a record high, and the Dow utilities also gained 1.9%.
Rising stocks outnumbered losers by about 3 to 1 on the New York Stock Exchange and by about 4 to 3 on Nasdaq. Trading volume was moderate.
For the week, the Dow and the S&P; 500 both gained 0.9%, while Nasdaq rose 0.3%.
The job report also bolstered U.S. Treasuries. Bond yields, which move in a direction opposite to that of prices, tumbled as inflation jitters eased. The yield on the benchmark 10-year Treasury note fell to 4.31% from 4.38% on Thursday.
The U.S. dollar weakened. With some currency traders expecting at least 300,000 new jobs, last month’s employment “numbers were not strong enough to support dollar bulls’ wildest desires,” Credit Suisse First Boston currency strategist Jason Bonanca told Bloomberg News.
The euro traded at $1.323, up from $1.311 on Thursday.
The day’s leading stock sectors included energy, boosted by oil at near-record levels; basic materials, which continue to benefit from heavy global demand for supplies such as steel; and home builders, which are sensitive to inflation trends because higher interest rates could choke off the housing boom.
Tech and healthcare, by contrast, remained laggards.
Hot stocks included paper and wood products maker Louisiana-Pacific, which rose $2.02 to $28.49; steel maker Nucor, which advanced $3.23 to $63.83; copper miner Phelps Dodge, up $3.93 to $108.47; Los Angeles-based home builder KB Home, which climbed $6.24 to $125.75; and oil and gas explorer Apache, which gained $2.19 to $65.69.
In other highlights:
* Krispy Kreme Doughnuts surged $1.38 to $7.50 on rumors that billionaire Warren E. Buffett might take a stake in the ailing chain. Buffett’s holding company, Berkshire Hathaway, did not respond to a request for comment, Reuters said.
* Hilton Hotels of Beverly Hills and Dell Computer both rallied after the companies vowed late Thursday to boost their stock buyback programs. Hilton gained $1.18 to $23.03 and Dell rose 87 cents to $40.87.
* Elan tumbled 94 cents to $5.71 and Biogen Idec slid $1.80 to $37.53 after a rare neurological disease was confirmed in a second patient who had taken Tysabri, their multiple sclerosis drug.
