Stock Indexes Mixed on Job Data
Wall Street limped to a mixed finish Friday as a surprisingly strong employment report raised fears that a surge in economic growth could spark inflation and prompt the Federal Reserve to aggressively raise interest rates. Bond yields soared on the news.
The economy created 274,000 jobs in April, far more than the 175,000 that Wall Street expected. With job gains for February and March revised upward, investors felt far more confident in the strength of the job market and economic growth.
However, with more money in the market and higher demand, the newly employed could force prices higher. That intensified Wall Street’s inflation fears.
“Now the thought isn’t about an economic soft patch. Now, we’re thinking about interest rates, and that puts the Federal Reserve back in play,” said Jay Suskind, head trader at Ryan Beck & Co.
Said John Waterman, chief investment officer at Rittenhouse Asset Management Inc.: “The stronger the growth is, the longer and harder the Fed’s going to have to raise rates, and the risk is they’re going to step on the brakes too hard and hurt growth.”
The Dow Jones industrial average rose 5.02 points, or 0.05%, to 10,345.40 after being up as much as 57 points in morning trading.
Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index was down 1.28 points, or 0.1%, at 1,171.35, and the Nasdaq composite index gained 5.55 points, or 0.3%, to 1,967.35.
Advancing issues barely outnumbered decliners on the New York Stock Exchange.
For the week, the Dow gained 1.5%, the S&P; rose 1.3% and Nasdaq picked up 2.4%.
Bond yields shot up as investors grew more concerned about interest rates. Bond yields rise as their prices fall.
The yield on the 10-year Treasury note climbed to 4.26% from 4.16% on Thursday. The two-year note rose even more sharply -- to 3.72% from 3.55% a day earlier. That was its biggest jump since May 7, 2004.
Crude oil futures were volatile as speculators tried to figure out whether the jobs report would affect oil prices. A barrel of light crude settled at $50.96, up 13 cents, on the New York Mercantile Exchange.
In other markets highlights:
* Bank stocks and real estate shares had the steepest declines among 24 industry indexes in the S&P; 500. Both groups retreated 1%. Higher interest rates could reduce the value of bonds owned by banks, brokers and insurers, and crimp demand for mortgages.
Bank of America fell 36 cents to $45.49 and Wachovia slid 65 cents to $51.31. Simon Property Group, the No. 1 U.S. shopping mall owner, dropped 94 cents to $66.20.
* The jobs report sent an S&P; index of staffing service companies up 2.3%. Monster surged $1.70, or 7.2%, to $25.36. Robert Half International, which provides specialized staffing services, increased 60 cents to $26.13.
* Fluor climbed $4.75, or 9%, to $57.30 for the biggest advance in the S&P; 500. After the market close Thursday, the Aliso Viejo-based engineering company reported first-quarter revenue that topped Wall Street estimates.
* Pixar jumped $2.43 to $48.70, a day after reporting better-than-expected first-quarter earnings on home video sales of its superhero film “The Incredibles.”
* Boeing added $1.27 to $61.01 -- its highest level since June 2001 -- after Northwest Airlines decided to order 18 of its new 787 Dreamliners valued at $2.16 billion.
* Jamdat Mobile, which makes games for mobile telephones, rose $6.82, or 38.9%, to $24.33 after the Los Angeles firm reported earnings that topped analysts’ forecasts and said profit this quarter also would top estimates.
* Zumiez, an Everett, Wash.-based sports retailer, rose $6.87, or 38%, to $24.87 in its first day of trading. The company raised $56.25 million in its initial public offering, selling about 3.13 million shares at $18 each.
