US stocks rise
on 06/11/2009 22:07:18
Investors added to the week's strong gains in the stock market after finding some positives in a surprisingly weak jobs report.
Stock indexes posted a modest advance in light trading today after the Labour Department said the US unemployment rate topped 10% in October for the first time since 1983, but also that the pace of job losses slowed.
The rise in unemployment, while not welcome news for the US 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, US goods are cheaper for buyers overseas. Companies that do business overseas also get a profit boost when their earnings are translated back into dollars.
Safe-haven assets 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.
The jobs report bodes poorly for consumer spending, a key driver of the economy. Economists say stronger consumer spending will be necessary to sustain a recovery.
The Labour Department said employers cut 190,000 jobs last month, fewer than the 219,000 jobs lost in September, but more than forecast. The unemployment rate jumped to 10.2% from 9.8% in September.
The market has been expecting unemployment to top 10% before peaking. But the pace of job losses has accelerated and the rate is likely to go higher.
According to preliminary calculations, the Dow Jones industrial average rose 17.46, or 0.2%, to 10,023.42. The Standard & Poor's 500 index rose 2.67, or 0.3%, to 1,069.30, while the Nasdaq composite index rose 7.12, or 0.3%, to 2,112.44.
For the week, major indexes rose more than 3%.