By Kristina Peterson
A better-than-expected jobs report for August sent U.S. stocks
higher Friday, marking their fourth-straight day in the black and
putting the market on track to snap a three-week losing streak.
The Dow Jones Industrial Average (DJI) added 100 points, or 1%,
to 10420, in recent trading. A weaker-than-forecast reading on the
services sector pared the measure's gains from earlier in the
session, when it had been up as much as 131 points. Still, the Dow
is up about 2.4% for the week, marking its first positive week
since the week ended Aug. 6 and the measure's best pre-Labor Day
week since 1990.
Nonfarm payrolls shed 54,000 jobs last month, roughly half the
110,000 drop economists had expected and matching the level of
revised losses recorded the previous month. The unemployment rate,
calculated using a separate household survey, edged up to 9.6%, as
expected, from 9.5% for the previous two months.
Following the jobs report, investors are thinking "there may be
a little bit more optimism from the consumer and the job seeker
right now," said Jeffrey Phillips, chief investment officer of
Rehmann. "And we might see the consumer spending start to recover a
little bit here."
The Nasdaq Composite (RIXF) increased 1.2% to 2226, and is on
track for a weekly gain of about 3.3%. The Standard & Poor's
500 index tacked on 1% to 1101, putting its advance for the week at
3.3%.
Friday's jobs numbers followed recent reports on manufacturing
and housing that also came in above expectations, extending a
notable reversal from a long string of disappointing data that had
driven the Dow's biggest August drop since 2001.
This week's better-than-expected data helped the Dow start
September with a bang, marking its best three days at the start of
a month since March 2009.
Still, volume was weak, with less than 2 billion shares having
changed hands in NYSE Composite trading as of 12:30 p.m. EDT. The
2010 daily average is 5.01 billion shares, although the average was
lower in August, just over 4 billion shares.
"Right now the buyers are coming out because we have had some
positive news on a relatively basis," Phillips said. "But certainly
the volume is not anywhere near what I would like to see."
The strong start to the month comes as investors have been
encouraged that a double-dip recession may be avoided. But the
economic recovery still looks weak, with data released Friday by
the Institute for Supply Management showing the U.S.
nonmanufacturing sector expanded at a much slower pace last
month.
"There's a low threshold for performance because the market had
priced in a deceleration in the global recovery over the last three
to four months," said Benny Lorenzo, chairman and chief executive
of Kaufman Brothers. "The underlying thesis is still there, that
this might just be a blip and that in fact there will be very
little growth."
The U.S. Dollar Index (DXY), reflecting the U.S. currency
against a basket of six others, declined 0.5%. Treasurys slipped,
pushing the yield on the 10-year note (UST10Y) up to 2.71%.
Crude-oil futures dropped below $74 a barrel while gold futures
also declined.
On the deals front, Goldcorp (GG) slipped 2.4% after the gold
miner agreed to acquire all outstanding shares of Andean Resources
for $3.4 billion. Andean's principal asset is the Cerro Negro gold
project located in Argentina. .
Shares of Take-Two Interactive Software Inc. (TTWO) rallied 10%
after the company reported an unexpected quarterly profit and said
it expects a fiscal-year profit. .
Tax-preparation company H&R Block Inc. (HRB) climbed 8.2%
after reporting a smaller-than-expected loss from continuing
operations.
Campbell Soup Co. (CPB) slipped 2.4% after its fiscal
fourth-quarter earnings jumped 64% on prior-year write-downs, but
revenue at its soup business weakened.
This afternoon, Dennis Lockhart, president of the Federal
Reserve Bank of Atlanta, is scheduled to speak in Tennessee about
the economy.