Job data help boost stocks
An upbeat report on U.S. job growth in February helped push the stock market higher Friday, capping a week that saw many markets worldwide rebound modestly after the previous week’s plunge.
Still, worries about rising troubles in the so-called sub-prime mortgage market kept a lid on investors’ enthusiasm Friday, as was true for much of the week.
“Generally, most people are still concerned that this downdraft is not over,” said Doug Johnston, head of U.S. trading at Canaccord Adams in Boston.
The Dow Jones industrial average edged up 15.62 points, or 0.1%, to 12,276.32 on Friday, and gained 1.3% for the week after diving 4.2% the previous week.
The market jumped at the outset of trading after the government said that employers added 97,000 net new jobs last month and that the unemployment rate slipped.
The data were strong enough to allay some of the recession jitters that had helped trigger the previous week’s market slump.
But the Dow surrendered most of its early gain of 70 points. One factor weighing on the market was a warning by Federal Reserve Gov. Susan Bies that defaults on home loans made to high-risk borrowers were the beginning of a wave of troubles in that segment of the market.
“This is not the end; this is the beginning,” she said in a speech.
Loan defaults have hammered shares of sub-prime lenders in recent weeks and they continued to fall Friday.
Yet the broader market closed higher. Winners topped losers by 3 to 2 on the New York Stock Exchange and by a narrower margin on Nasdaq.
The Standard & Poor’s 500 index added 0.96 of a point, or less than 0.1%, to 1,402.85. It rose 1.1% for the week.
The Nasdaq composite slipped 0.18 of a point to 2,387.55, but was up 0.8% for the week.
“You have a market kind of searching for direction,” said Kurt Brunner, who helps manage $1.5 billion at Swarthmore Group in Philadelphia.
Despite the troubles of some mortgage lenders, “investors have to recognize that we’re not seeing that significant a deterioration [in the economy], that we’re not going into a recession,” Brunner said.
Foreign stock markets mostly had dull sessions Friday, but many key markets rose for the week. Brazil’s main index jumped 4.2% for the week after sliding 7.9% the previous week. German shares gained 1.7% for the week after dropping 5.6% the previous period.
Among the day’s market highlights:
* The dollar continued to rebound against the yen, ending at 118.15 in New York, up from 117.14 on Thursday and 116.75 a week earlier.
The yen’s slide, after surging the previous week, suggested the pressure was easing on speculators who had borrowed in yen in recent years to buy high-risk investments worldwide.
Some of the selling in markets the previous week was attributed to traders who were dumping investments to repay yen loans.
* Treasury bond yields rose as the job report eased concerns that the U.S. economy was fast losing steam. The 10-year T-note yield jumped to 4.59% from 4.51% on Thursday and was up from 4.50% a week earlier.
* Near-term crude oil futures in New York fell $1.59 to $60.05 a barrel on expectations that warm weather forecast to move into the Northeast next week would cut heating-fuel demand.
* Small-company shares showed more strength than blue chips. The Russell 2,000 index rose 0.5% and was up 1.2% for the week after tumbling 6.2% the previous week.
* Among mortgage lenders, New Century Financial plunged 66 cents to $3.21 as rumors continued to swirl that the Irvine-based sub-prime lender would soon file for bankruptcy protection.
Other lenders closing lower included Countrywide Financial, down 48 cents to $36.10; Fremont General, off 31 cents to $8.03; and IndyMac Bancorp, down 53 cents to $30.64.
* Vonage Holdings plummeted 69 cents to $4.17 after a federal jury Thursday found the Internet phone company had infringed three patents owned by Verizon Communications and must pay royalties.
* La Jolla Pharmaceutical rocketed $1.78 to $5.91 after the San Diego firm produced encouraging test results for its drug Riquent, a treatment for the autoimmune disease lupus.
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Two big weeks
How key stock market indexes worldwide fared this week compared with the previous week:
*--* Pctg. change: Last This Market/index week week Brazil/Bovespa -7.9% +4.2% China/ Shanghai compos. -5.6 +3.8 Mexico/IPC -7.7 +3.0 Germany/DAX -5.6 +1.7 U.S./S&P; 500 -4.4 +1.1 U.S./Nasdaq -5.8 +0.8 S. Korea/compos. -3.8 +0.6 Russia/RTS -7.2 +0.6 Japan/Nikkei -5.3 -0.3 Hong Kong/ Hang Seng -6.1 -1.6
*--*
Note: Changes are measured in local currencies.
Source: Bloomberg News
