The Dow Jones industrial average closed up nearly 260 points as investors' shock dissipated over the Labor Department's report that employers slashed 533,000 jobs in November compared with the 320,00 that economists forecast. Ultimately, even a terrible reading on employment wasn't surprising to a market that has been drubbed by a stream of bad economic news.
The market's advance in light trading volume left Wall Street with moderate losses for the week, the result of a nearly 680-point slide in the Dow on Monday. More important, the market was able to claim a victory of sorts over the course of the week
- except for Monday's drop, stocks repeatedly overcome bleak economic data and corporate announcements.
Demand for the safety of government debt eased slightly Friday but remained high. In the past week, Treasury yields have plunged to their lowest levels since the government started issuing them.
Stock market investors who originally sold Friday after the employment figures had a change of heart by afternoon, believing the numbers could make the government more likely to supply more aid for the economy. They also appeared relieved by the market's relatively cool reaction to the data
- trading was orderly and the huge loss of jobs didn't spark the type of massive sell-off it might have even a month ago when Wall Street still trying to determine how severe the recession would be.
"In a kind of paradoxical sense, the really ugly employment numbers probably helped the case for more help from Washington, whether it's through the broader stimulus plan or more targeted industry measures," said Craig Peckham, equity trading strategist at Jefferies & Co.
Job losses were widespread, hitting manufacturing, construction, retail, financial and other sectors.
Beyond the hopes for more aggressive moves by the government, strength in the tattered financial sector also gave a boost to the overall market Friday. An upbeat forecast from Hartford Financial Services Group Inc. cut through some of investors' fears that profits among financial firms would continue to spiral lower; the company raised its profit expectations for the year and quelled some concerns about the strength of its balance sheet.
Kim Caughey, equity research analyst at Fort Pitt Capital Group, said that Hartford's "bullish commentary" boosted investors' appetite for financial companies like insurers and banks.
Friday's advance was the eighth for the Dow in 10 sessions, raising some hopes that stability was returning to the Street after months of turbulence. But some analysts were still cautious.
"The markets are, in my view, acting not stable at all but with excessive volatility and unpredictability," said Gary Townsend, president and chief executive of private investment group Hill-Townsend Capital Inc. "It's a very difficult market to invest into and a very difficult market to trade."
The Dow industrials jumped 259.18, or 3.09 percent, to 8,635.42 after falling by 258 and rising as much as 310 in the volatile trading late in the session.
Broader stock indicators also advanced. The Standard & Poor's 500 index rose 30.85, or 3.65 percent, to 876.07, and the Nasdaq composite index rose 63.75, or 4.41 percent, to 1,509.31.
The Russell 2000 index of smaller companies rose 21.56, or 4.91 percent, to 461.09.
Two stocks rose for every one that fell on the New York Stock Exchange, where consolidated trading volume came to a light 6.03 billion shares, compared with 5.7 billion traded Thursday. Thin trading can exacerbate the market's moves.
For the week, the Dow fell 2.2 percent, the S&P 500 declined 2.3 percent and the Nasdaq fell 1.7 percent.
Bond prices fell as stocks turned higher - ending a winning streak that had sent yields to record lows for much of the week. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 2.70 percent from 2.56 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.02 percent from 0.01 percent late Thursday.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell $2.86 to settle at $40.81 a barrel on the New York Mercantile Exchange. Concerns about the economy and weakening energy demand have kept oil prices near four-year lows. The price of oil has fallen a staggering 72 percent since peaking at $147.27 in July.
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Analysts said the extent of the labor market's weakness likely will galvanize government officials.
"In the perverse way that the market works, there's a hope that it further fuels the dire need for economic stimulus for the Street and for the consumer, with so many people out of work right now," said Ryan Larson, senior equity trader at Voyageur Asset Management.
The Federal Reserve and the Treasury have been taking unprecedented steps to revive the economy since the mid-September bankruptcy of Lehman Brothers Holdings Inc. The biggest move was the government's $700 billion rescue for the banking sector. The Treasury said Thursday it is considering a plan to encourage banks to make mortgage loans at low rates; that could help patch up the troubled housing market, which many analysts say is crucial to any economic recovery.
While the deluge of bad economic readings have weighed on the markets in the past several months, investors are growing somewhat accustomed to the news. The stock market, which generally looks ahead, tends to recover six to nine months before economic reports show a recession is abating. At some point, investors likely will determine that a recession has been fully built into the market's expectations and will begin placing bets on a recovery.
Part of investors' latest uncertainty centers on the automakers. The heads of Detroit's Big Three appeared on Capitol Hill this week. General Motors Corp., Ford Motor Co. and Chrysler LLC are collectively seeking $34 billion in emergency funding. While the market largely expects the companies will win some sort of government aid, support for the troubled carmakers isn't assured.
GM fell 3 cents, or 0.7 percent, to $4.08, while Ford rose 6 cents, or 2.3 percent, to $2.72. Chrysler isn't publicly traded.
Financial stocks also rallied after Hartford's forecast. Hartford's stock doubled, jumping $7.38 to $14.59. Other financials rose as well. Wells Fargo & Co. advanced $2.39, or 8.7 percent, to $29.94, while Prudential Financial Inc. surged $7.35, or 35 percent, to $28.52.
Optimism that buoyed some overseas markets following massive interest rate cuts across Europe Thursday deflated following the report on U.S. jobs. Britain's FTSE 100 fell 2.74 percent, Germany's DAX index fell 4 percent, and France's CAC-40 declined 5.48 percent. Japan's Nikkei stock average slipped 0.08 percent; trading in Tokyo ended before the employment report was released.
The Dow Jones industrial average ended the week down 193.62, or 2.19 percent, at 8,635.42. The Standard & Poor's 500 index finished down 20.17, or 2.25 percent, at 876.07. The Nasdaq composite index ended the week down 26.26, or 1.71 percent, at 1,509.31.
The Russell 2000 index finished the week down 12.05, or 2.55 percent, at 461.09.
The Dow Jones Wilshire 5000 Composite Index - a free-float weighted index that measures 5,000 U.S. based companies
- ended at 8,737.14, down 208.06 points, or 2.33 percent, for the week. A year ago, the index was at 14,963.52.
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
Press; By TIM PARADIS]
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