Wall Street cheered by upbeat jobs report
Economy sheds fewer jobs than expected in July; jobless rate dips
Aug 7, 2009
Market update
Index Last Change % change
• DJIA 9370.07 +113.81 +1.23%
• NASDAQ 2000.25 +27.09 +1.37%
• S&P 500 1010.48 +13.40 +1.34%
President Barack Obama told the nation Friday that the "worst may be behind us" on the recession after the unemployment rate dipped for the first time in 15 months.
The surprise figures injected new life in a monthlong rally and provided validation for traders who have been betting since March that the economy is healing. The Dow Jones industrial average rose 114 points to cap its fourth straight weekly gain. The Dow is at its highest level since early November.
The government said employers shed 247,000 jobs in July, the fewest in a year. Economists had expected 320,000 lost jobs. The unemployment rate dropped to 9.4 percent from 9.5 percent in June, rather than rising to 9.6 percent as forecast.
"It really gave the market the proof that it needed to see," said Burt White, chief investment officer at LPL Financial in Boston.
The report is often the most anticipated bit of economic news each month on Wall Street and nervousness about what it would reveal held stocks to modest moves most of the week. The exception came Monday when Ford Motor Co. said its monthly sales rose for the first time in nearly two years because the government's cash for clunkers program was drawing customers. That, and good news about manufacturing, construction and banking, sent the Standard & Poor's 500 index over 1,000 for the first time in nine months.
With the pop Friday, the S&P 500 index is up 14.9 percent in only four weeks and 49.4 percent from a 12-year low in early March.
The Dow rose 113.81, or 1.2 percent, to 9,370.07. The broader S&P 500 index gained 13.40, or 1.3 percent, to 1,010.48, while the Nasdaq composite index rose 27.09, or 1.4 percent, to 2,000.25.
About 2,300 stocks rose on the New York Stock Exchange, while about 700 fell. Consolidated volume rose to 7 billion shares from 6.8 billion Thursday.
For the week, the Dow added 2.2 percent, the S&P 500 index rose 2.3 percent and the Nasdaq rose 1.1 percent.
Meanwhile, bond prices fell as the jobs reading limited demand for the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.86 percent from 3.76 percent late Thursday.
Financial and retail stocks rallied Friday along with the broader market.
Insurer American International Group Inc. posted its first quarterly profit since 2007. The insurance giant, which is now majority owned by the government, rose $4.61, or 20.5 percent, to $27.14.
The jump in retail stocks came a day after many posted lackluster July sales. A drop in unemployment could make consumers feel more confident about making purchases, which could help the recovery along. Their spending accounts for more than two-thirds of U.S. economic activity. Macy's Inc. rose 98 cents, or 6.5 percent, to $15.99.
On other days, selling has been contained because investors don't want to miss a rally that has surprised many traders with its strength. On Wednesday, the Dow fell only 39 points but it was the biggest drop in a month.
Investors will be looking for more insight into the economy when the Fed's interest-rate committee concludes a two-day meeting on Wednesday. It is unclear when policymakers will decide the economy is strong enough to handle rate hikes that will be needed to keep inflation in check.
Light, sweet crude fell $1.01 to settle $70.93 a barrel on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies rose 14.78, or 2.7 percent, to 572.40.
The dollar mostly rose against other major currencies, while gold prices advanced.
