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Stocks finish 3% higher for week

Published:November 7, 2009, 8:39 AM

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Updated: August 21, 2010, 2:55 AM

NEW YORK — Undaunted by a surprisingly weak jobs report, investors found enough positive news to nudge stocks higher Friday.

Word that the nation’s unemployment rate rose above 10 percent last month for the first time in 26 years didn’t derail the stock market’s strong gains in the week, which lifted major indexes more than 3 percent.

The rise in joblessness to 10.2 percent, while bad news for the economy, reassured some investors that the Federal Reserve will have to hold interest rates low for some time. That tends to weaken demand for the dollar, which in turn gives a boost to stocks.

“We got data today that suggests that interest rates are going to be on hold for a while,” said Max Bublitz, chief strategist at SCM Advisors.

When the dollar is weaker, U. S. goods are cheaper for buyers overseas. Companies that do business overseas also get a profit gain when their earnings are translated back into dollars.

Safe-haven assets like Treasurys were mixed. Oil prices tumbled, and gold topped $1,100 an ounce for the first time. Gold benefits when investors are worried about a weak dollar and inflation.

General Electric Co., meanwhile, rose 6 percent after analysts raised their ratings on the stock. It was the biggest gainer among the 30 Dow industrials.

The jobs report bodes poorly for consumer spending, a key driver of the economy.

“The consumer remains cautious, and if they remain cautious they don’t spend,” said Michael Feser, president of Zecco Trading.

The Dow Jones industrial average rose 17.46, or 0.2 percent, to 10,023.42, boosting its gain for the week to 311 points. The Standard & Poor’s 500 index rose 2.67, or 0.3 percent, to 1,069.30, while the Nasdaq composite index rose 7.12, or 0.3 percent, to 2,112.44.

For the week, the Dow and the S&P 500 index added 3.2 percent, while the Nasdaq rose 3.3 percent.

Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where consolidated volume came to 4.3 billion shares, compared with 4.9 billion Thursday.

Bond prices mostly climbed. The benchmark 10-year Treasury note rose, pushing its yield down to 3.51 percent from 3.53 percent late Thursday.

Oil fell $2.12 to settle at $77.87 per barrel on the New York Mercantile Exchange. Gold rose $6.40 to settle at $1,095.70 an ounce on the New York Mercantile Exchange, adding 5.3 percent for the week.

Jeffrey Friedman, senior market strategist at Lind-Waldock, a futures brokerage, said the jobs report is worrisome.

“We’re still losing jobs; 10.2 is not a good number. And in reality, it’s probably even higher,” he said.

Some analysts saw reasons for optimism such as a rise in the number of temporary service jobs. Companies that are reluctant to commit to hiring often will first bring in temps to meet demand until they’re more confident of a turnaround in the economy.

Linda Duessel, equity market strategist at Federated Investors, noted that payroll numbers turn higher an average of 4z months after temp numbers begin to rise.

“We’ve been looking for temps to turn, and they turned,” she said. “It’s good.”

Although investors found a few bright spots in the jobs report, the numbers did shake their confidence in the economic recovery, stoked Thursday by an encouraging outlook from Cisco Systems, better data on productivity and higher sales at major retailers. The Dow jumped 203 points on the day’s string of good news to close above 10,000 for the first time in two weeks.

Thursday’s jump brought most of the week’s advance. The market rose Monday after improved manufacturing and housing figures raised expectations for the economy. Moves on Tuesday and Wednesday were modest.

Investors will have fewer economic reports to drive trading next week. A report due Friday on consumer sentiment will draw attention because traders are eager for any signals about how consumers will spend heading into the holiday season.

But earnings reports from such retailers as the J. C. Penney Co., Macy’s and Walmart Stores will give investors more insight into how consumers are likely to behave in the coming months. Walt Disney Co.’s earnings may also provide clues about consumers.

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