The News Herald (Willoughby, OH)
Stocks rise as investors cheer August jobs report
NEW YORK » Not great, but good enough: U.S. stocks rose Friday as investors viewed a relatively weak jobs report for August as likely to help keep interest rates low. Banks, energy companies and automakers led the way.
The Labor Department said U.S. employers added 156,000 jobs in August.
That was a bit less than analysts expected, but investors were pleased that the economy kept growing at a steady pace while inflation remains weak. They bet that will keep the Federal Reserve from raising interest rates too quickly. Car companies rose as they reported their August sales. Wall Street expects them to get a boost as Gulf Coast residents replace the hundreds of thousands of cars that have been damaged by rains and flooding this week. Banks rose as bond prices dropped, which sent yields and interest rates higher.
The pattern of slow but steady job gains and weak inflation has helped push stocks higher for years. Investors have worried at times that the Federal Reserve would raise rates too fast and that the economy would stumble.
“The market is looking at economic news that is below expectations as a sign that the Federal Reserve is not going to do much in terms of interest rate hikes,” said Scott Wren, senior global equity strategist for Wells Fargo Investment Institute. He said Friday’s report was “like almost every other jobs report we’ve seen over the last four years.”
The Standard & Poor’s 500 index rose 4.90 points, or 0.2 percent, to 2,476.55. The Dow Jones industrial average gained 39.46 points, or 0.2 percent, to 21,987.56. The blue chip index had its first change in more than two years on Friday, as longtime Dow component DuPont combined with former rival Dow Chemical to form DowDuPont. The Nasdaq composite added 6.67 points, or 0.1 percent, to 6,435.33. It was the best week this year for the Nasdaq as technology and health care companies surged. The index is at record highs.
The Russell 2000 index of smaller-company stocks advanced 8.29 points, or 0.6 percent, to 1,413.57.
Six months ago, stocks made their biggest gain of the year: the S&P 500 jumped 1.4 percent on March 1. The index has gained just 3.3 percent since then.
While businesses continue to hire workers at a steady pace, inflation is well still below the Federal Reserve’s target of 2 percent. The Fed has raised interest rates three times in the last year and says it plans to raise rates once more this year, and three times in 2018. But based on reports like Friday’s, investors don’t think that will happen.
Long-term government bond prices moved lower. The yield on the 10-year Treasury note rose to 2.16 percent from 2.12 percent, but the yield on the two-year note remained at 1.33 percent. Still, the increase in bond yields and interest rates gave banks a boost. JPMorgan Chase rose 81 cents, or 0.9 percent, to $91.70.