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Stocks mixed after good jobs report

September 11, 2009|Associated Press

NEW YORK — Stocks rose for a fifth straight session Thursday after a drop in weekly unemployment claims and an upbeat forecast from a consumer product giant raised hopes for the economy.

Falling yields on Treasury securities also fed demand for stocks.

The Dow Jones industrial average climbed 80 points to its highest close since October. The index is up 347 points in the last five trading days.

The gains have come even as some analysts have described the market as overdue for a retreat. The Standard & Poor's 500 index is up 54% since hitting a 12-year low in March, though it's still down 33% from its peak in October 2007.

Thursday's move up followed the Labor Department's report that initial jobless claims fell more than expected to 550,000 last week. An upbeat forecast from Procter & Gamble added to enthusiasm about an economic recovery.

Meanwhile, the government reported that U.S. inventories of crude oil fell more than expected last week. That stirred hopes that a strengthening economy is increasing its appetite for resources.

David Bianco, head of U.S. equity strategy at Banc of America Securities-Merrill Lynch in New York, said the rally had merit because stocks had tumbled so far since their peak.

"This is a rally that's supported by the fundamentals," he said. "Maybe it's moving a little bit too fast for the normal rules of thumb, but we haven't seen a crash like that since the Great Depression."

The Dow rose 80.26 points, or 0.8%, to 9,627.48 to its highest close since Oct. 6, when it ended at 9,956. The index is up 3.7% in five days.

The broader S&P 500 index climbed 10.77 points, or 1%, to 1,044.14, its first five-day climb since November.

The Nasdaq composite index jumped 23.63, or 1.2%, to 2,084.02.

The Russell 2,000 index of smaller companies rose 1.5%.

Three stocks rose for every one that fell on the New York Stock Exchange.

Treasury yields sank after a $12-billion auction of 30-year T-notes drew strong demand. The yield on the benchmark 10-year Treasury note fell to 3.33% from 3.48% late Wednesday. The yield on the 30-year bond slumped to 4.17% from 4.33%.

Investors made selective bets on companies after a mixed batch of corporate forecasts.

P&G rose 4.2% after the maker of Tide soap and Gillette razors predicted a rebound in sales this fall.

Monsanto tumbled 5% after warning that its 2009 earnings would come in at the low end of its forecast.

Ralph Fogel, co-chief investment officer at Fogel Neale Partners in New York, argues that too many analysts are now expecting a pullback for it to happen. He pointed to a well-tested piece of Wall Street wisdom that if a certain prediction becomes too widely expected in the marketplace, that conclusion is often wrong.

"I'm not sure why this market is going to slow up so much," Fogel said. "We look for a nice continued move upward."

Some analysts remain cautious. Subodh Kumar, global investment strategist at Subodh Kumar & Associates in Toronto, contends that the market needs a break.

"The fact that it got here without any meaningful corrections means it hasn't stopped since March to test the validity of its assumptions," he said.

The dollar fell against other major currencies. Gold slipped.

Oil futures rose 63 cents to settle at $71.94 a barrel in New York trading.

Overseas, key stock indexes fell 0.3% in Britain and 0.1% in France but gained 2% in Japan and 0.4% in Germany.

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