Advertisement
YOU ARE HERE: LAT HomeCollections

FINANCIAL MARKETS

Decline in Jobless Rate Spurs Dow

May 09, 1998| From Times Wire Services

U.S. stocks rose for the first time in four days Friday, as an unexpected drop in the jobless rate spurred optimism for faster profit growth.

The Dow Jones industrial average rose as much as 119 points before finishing 78.47 points higher at 9,055.15. Still, it was down 91.92 points for the week. The barometer of 30 blue-chip companies had lost 215 points over the prior three sessions after closing at a record 9,192.66 on Monday.

Broader stock indexes also began rebounding amid what many analysts termed only a temporary respite from the renewed concerns about interest rates and continuing economic instability in Asia.

The Nasdaq market posted the sharpest gain as bellwether technology stocks roared back to life.

In the most anxiously awaited event of the week, the Labor Department reported that the unemployment rate fell to a 28-year low of 4.3% in April as the U.S. economy created 262,000 new jobs. The report also showed average hourly earnings rose 4 cents to a record $12.67.

The data was stronger than expected, but not so much that it could instantly resolve a two-week debate over whether the inflation-leery Federal Reserve Board might slow the economy with higher interest rates.

The 30-year Treasury bond prices ended lower to yield 5.98%, up from 5.95% on Thursday. Bond prices and yields move in opposite directions.

Fed officials, who are due to convene on May 19 for a policy meeting, have been concerned for some time that a strong job market might force employers to boost wages--and prices.

"Overall, while the Fed will remain vigilant, there was nothing in today's report to trigger an imminent rate hike," said Sherry Cooper, chief economist for Nesbitt Burns.

However, until the May 19 meeting passes without event, the market may remain locked in the tight trading range seen in recent weeks.

"The message of market for two weeks is that this is still a bull market, but it's a bull market that has rallied 22% from its January low to its recent high," said Alfred E. Goldman, director of market analysis at A.G. Edwards & Sons of St. Louis. "The best of athletes and the best of bulls have to rest from time to time."

The Standard & Poor's 500 rose 13 points to 1,108.14, while the Nasdaq composite index rose 29.23 points to 1,864.37, led by Dell Computer, up $5.13 to $91.75; Intel, up $3.06 to $84.06, and Microsoft, up $2.38 to $85.75.

Advancing issues outnumbered decliners by an 8-to-5 margin on the New York Stock Exchange, where volume totaled 567.89 million shares, down from Thursday's pace.

The NYSE composite index rose 5.50 points to 575.72, and the American Stock Exchange composite index rose 1.98 points to 744.23.

The Russell 2,000 index of smaller companies rose 3.54 points to 479.50.

Among Friday's highlights:

* General Electric led the day's gains after its chairman predicted annual revenue of $125 billion by 2000. Signs that inflation isn't about to accelerate and cause interest rates to rise, coupled with indications that corporate profits are expanding, spurred confidence that stocks have room to rise. GE rose $1.31 to $83.19.

* Drug stocks rebounded as investors switched money back into pharmaceuticals after the sector's recent retreat.

Dow component Merck rose $2.88 to $117.88. Schering-Plough advanced $2.44 to $84.50. Johnson & Johnson gained $1.50 to $71 and Pfizer jumped $4.25 to $111.19.

* Auto stocks rose for a third day following Chrysler and Daimler-Benz's plans to merge. General Motors rallied $1.81 to $68.69, Ford gained 19 cents to $45.81 and Daimler-Benz's American depositary receipts jumped $5 to $111.38. Chrysler rose 31 cents to $53.81.

Overseas, Tokyo's Nikkei stock average edged higher, Frankfurt's DAX index rose 1.45% and London's FTSE-100 rose 0.5%.

Market Roundup, D4

Advertisement
Los Angeles Times Articles
|
|
|