Jobs Report Lifts Spirits
Updated from 4:09 p.m. EDT
Stocks climbed Friday as the latest employment report suggested to traders that the
Federal Reserve
will decide the economy isn't overheating and again leave rates unchanged at its meeting later this month.
The
Dow Jones Industrial Average
rose 83 points, or 0.73%, to 11,464.15, and the
S&P 500
was up 7.19 points, or 0.55%, to 1311.01. The
Nasdaq Composite
was higher by 9.41 points, or 0.43%, to 2193.16. U.S. markets will be closed Monday for the Labor Day holiday.
Aiding the Dow's ascent was a 3.7% advance for
General Motors
(GM) - Get Report
. The carmaker posted a 3.9% rise in U.S. vehicle sales in August but slashed its fourth-quarter production forecast by 12%. GM was higher by $1.09 to finish at $30.27.
Also lending support were gains of more than 1.6% in
Wal-Mart
(WMT) - Get Report
,
Intel
(INTC) - Get Report
and
McDonald's
(MCD) - Get Report
.
For the week, the Dow jumped 180 points, or 1.6%, and the S&P 500 rose 15 points, or 1.2%. The Nasdaq gained 53 points, or 2.5%, over the five sessions.
Volume was light heading into the weekend, with about 1.13 billion shares changing hands on the
New York Stock Exchange
. Advancers beat decliners by a 2-to-1 margin. Around 1.36 billion shares traded on the Nasdaq, and winners led losers 4 to 3.
Before the opening bell, the Labor Department said the economy added 128,000 jobs in August. The unemployment rate dipped to 4.7% from 4.8%. Economists had anticipated a gain of about 125,000 jobs, according to a
Bloomberg
survey. Average hourly earnings, a key inflation metric, rose a lower-than-expected 0.1%.
As usual, the employment numbers provided crucial insight into the pace of growth in the U.S. economy and, in turn, the future of interest rate policy. With the next meeting 19 days away, the futures market was pricing in 8% odds of a rate increase at any Fed meeting by year-end.
"The softer trend in employment growth is still in place, though the numbers are certainly not melting down," said Ian Shepherdson, chief economist with High Frequency Economics. "Overall, the trend in payrolls has stabilized at a subtrend 120,000 or so. We expect a significant further
slowdown by the year-end. The Fed expects subtrend growth to continue, so no more hikes."
To view Gregg Greenberg's video take on today's market, click here
.
Elsewhere on the economic front, the University of Michigan's consumer sentiment index rose to 82.0 from 78.7 in early August, and the Institute for Supply Management said its manufacturing index dipped to a reading of 54.5 last month from 54.7 in July. Additionally, the Commerce Department said that construction spending unexpectedly fell 1.2% in July.
The 10-year Treasury note was up 2/32 in price to yield 4.72%, and the dollar declined against the yen and euro.
Energy prices eased amid trepidation as the deadline passed for Iran to respond to a United Nations demand that it halt uranium enrichment. Crude for October delivery fell by $1.07 to close at $69.19 a barrel, and gasoline was lower by 5 cents at $1.73 a gallon.
In addition to GM, other automakers posted August sales results. Results come a day after
Ford
(F) - Get Report
said it will consider the sale of its Aston Martin brand in order to fund its North American turnaround plan.
Ford posted an 11.6% drop in August U.S. sales to 255,112 cars and trucks, and
DaimlerChrysler
(DCX)
said sales fell 3.2% to 199,767 vehicles.
Both
Bristol-Myers Squibb
(BMY) - Get Report
and
Sanofi-Aventis
(SNY) - Get Report
were among the movers after a federal court judge blocked the sale of generic versions of the blood-thinning drug Plavix.
Bristol-Myers climbed 5.5% to $22.95. Sanofi-Aventis was higher by 0.9% to close at $45.37.
Shares of Intel also traded higher after a report in
The Wall Street Journal
said the company could slash up to 20,000 jobs next week. Intel added 31 cents, or 1.6%, to $19.88.
Late Thursday,
Starbucks
(SBUX) - Get Report
said that August same-store sales were up 5%, ahead of the Thomson First Call average estimate of 4.2%. The stock tacked on 75 cents, or 2.4%, to $31.76.
Meanwhile, video-game maker
Take-Two
(TTWO) - Get Report
finished lower after issuing a warning that its bottom line for the fiscal third and fourth quarters will likely fall short of analysts' targets.
In addition, the company said it has been hit with grand jury subpoenas related to its past options practices. Take-Two dropped 89 cents, or 7.3%, to $11.31.
Overseas, European indices traded higher. London's FTSE 100 added 0.8% to 5952, and Germany's Xetra DAX rose 0.3% at 5876. Stocks were mixed in Asia, as Japan's Nikkei finished unchanged at 16,134, and Hong Kong's Hang Seng tacked on 0.2% to 17,423.
