Stocks extend September rally after jobs report
NEW YORK (AP) – The stock market had its first winning week in a month thanks to better news on the economy.
The Dow Jones industrial average jumped 128 points Friday, its fourth straight day of gains. The strong start to September marked a turnaround from a dismal performance in August.
A better-than-expected report on employment Friday was the latest piece of improving news on the economy. Stocks also gained earlier this week following signs that manufacturing was gaining in the U.S. and China.
Even after its four-day run, which added 438 points to the Dow, the index is still 6.8 percent below the 2010 high it reached on April 26. Stocks had eased slightly after a report showed that the services sector didn’t grow as fast as hoped in August.
The Labor Department said private employers added 67,000 jobs in August, more than analysts polled by Thomson Reuters had forecast. But that’s still a far cry from what economists say is a healthy level for the economy.
“We need to get that number over 100,000 to feel comfortably that we won’t slip back into recession,” said Bill Hampel, chief economist for the Credit Union National Association. “We need it over 150,000 to feel confident we have a nice, sustainable recovery.”
The Dow closed up 127.83, or 1.2 percent, at 10,447.93.
Broader indexes also rose. The Standard & Poor’s 500 Index rose 14.41, or 1.3 percent, to 1,104.51, while the Nasdaq composite index rose 33.74, or 1.5 percent, to 2,233.75.
About three stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume was relatively light at 3.6 billion shares.
Bond prices fell as sentiment on the economy improved, sending interest rates higher. The yield on the 10-year Treasury note jumped to 2.71 percent from 2.63 percent late Thursday. Its yield is often used as a gauge to set interest rates on mortgages and other consumer loans.
Investors have received more encouraging reports on the economy over the past three days than they did throughout August, when data regularly fell short of the market’s already modest expectations. Reports beginning with Wednesday’s manufacturing data touched off a rally at the beginning of September, which is historically a bad month for stocks.
There were other encouraging signs in the employment report Friday, including revisions to June and July’s reports that showed the economy added more jobs than the government previously said.
More than a half-million Americans resumed their job searches in August. That drove up the unemployment rate to 9.6 percent from 9.5 percent, but it could also be a sign that more people are hopeful about the recovery.
For the week, the Dow is up 2.9 percent, while the S&P 500 and the Nasdaq are both up 3.7 percent. It was the first week of gains in a month for both the Dow and S&P.
The S&P 500, the market gauge most used by professional investors, lost 4.7 percent in July on a string of disappointing economic news. That was the worst August performance for the index since 2001, when the dot-com bubble was bursting.
The Institute for Supply Management said the services sector continued to expand in August, but that growth slowed sharply from the previous month and more than economists predicted. The services sector, which accounts for 80 percent of jobs in the country, has not recovered as strongly as manufacturing.