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Stocks surged higher today after the government's employment report showed the U.S. economy added jobs at a slower-than-expected pace and that wage growth moderated in August, helping to ease fears about rising inflation.

At 1 p.m., the Dow Jones industrial average was up 220.04 at 11,063.25.

Broader stock indicators were also sharply higher. The Standard & Poor's 500 index was up 35.77 at 1,354.88, and the Nasdaq composite index gained 84.24 to 2,818.48.

Stocks rose after the Labor Department reported that employers added 124,000 jobs to their payrolls in August and that average hourly earnings, a key gauge of inflation pressures, rose just 0.2 percent from a year ago.

Both figures helped ease concerns that the economy is overheating and that inflation is rising, and they provided good news for investors who believe that any inflationary signs could prompt the Federal Reserve to raise interest rates for a third time this year.

The Fed has raised interest rates twice this summer and hinted it won't raise them again if the economy is moderating and inflation remains tame. Higher interest rates cut into corporate profits by raising the cost of borrowing.

Bond prices also rose on the employment report, pushing yields on 30-year Treasuries down to 6.03 percent from 6.13 percent late Thursday.

Leading the S&P 500's advance, Microsoft Corp. rose 2 to 93 3/1 6, General Electric Co. gained 2 1 5/1 6 to 115 1 5/1 6, Intel Corp. rose 2 3/8 to 87 1 1/6 , Cisco Systems Inc. gained 2 to 70 1/4 and Citigroup Inc. climbed 1 7/8 to 45 7/8 . Financial and computer issues are among the biggest beneficiaries of stable or lower rates. Only one stock within the computer-packed Nasdaq 100 Index declined.

Quintiles Transnational Corp. rose 3 3/1 6 to 38 5/1 6. The world's largest provider of clinical trials and marketing for drugmakers will replace King World Productions Inc., the TV-show distributor that's being bought by CBS Corp., in the S&P 500 Index after Sept. 7.

Stocks of companies that are added to the S&P 500 Index often rise, as managers of mutual funds whose portfolios match the makeup of the S&P 500 must buy the shares. About $700 billion is indexed to the S&P 500.

Financial stocks, the most sensitive to interest rate changes, surged today. J.P. Morgan was up 4 1/1 6 at 130 and American Express was up 3 9/1 6 at 139 7/1 6.

Coca-Cola Co., the world's largest soft-drink maker, fell 2 1/1 6 to 57 7/1 6 after warning profit for the rest of this year will be below estimates. Coke blamed a recall of its drinks in Europe this summer and sluggish sales in Latin America, China and Russia.

Coke said it expects third-quarter earnings of 34 cents to 35 cents a share before accounting for the European product withdrawal. The recall is expected after saying it expects profit to top the 32 cents a share it earned a year ago. Analysts polled by First Call expect 33 cents. A 4 percent drop in concentrate shipments won't hurt earnings, the company said.

Advancing issues outnumbered decliners by a 6-to-1 margin on the New York Stock Exchange, where volume came to 351.70 million shares, down from 381.4 million shares on Thursday.

The Russell 2000 index of smaller companies rose 6.63 to 434.05.

Overseas, Japan's Nikkei stock average fell 0.01 percent. In afternoon trading, Germany's DAX index was up 0.6 percent, Britain's FT-SE 100 was up 1.9 percent, and France's CAC-40 was up 2.5 percent.

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