Stocks break 4-day slide ahead of jobs report | Shanghai Daily

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Stocks break 4-day slide ahead of jobs report

INVESTORS moved back into stocks after a four-day slide as they awaited a key U.S. government report on unemployment.

The Dow Jones industrial average tacked on 64 points yesterday after sliding 300 points since Friday. Stocks held to a tight range in light trading volume as some investors squeezed in late-summer vacations. Those remaining braced for the August jobs report, which is due before the opening bell Friday.

The biggest gains came in the final half-hour, with the Dow doubling its advance, as some traders looked to buy ahead of the jobs data. Economists expect the unemployment rate to edge up to 9.5 percent from 9.4 percent, while the number of layoffs is expected to slow to 225,000 from 247,000.

The latest snapshot on employment yesterday offered investors little to go on ahead of the big report due on Friday. The Labor Department said the number of people filing for unemployment claims fell last week by 4,000 to 570,000 while the number of people receiving benefits rose. Economists had been expecting a bigger drop, and the report served as a reminder of how difficult a recovery in employment will be.

In other economic news, monthly sales reports from retailers yesterday revealed that while some consumers are starting to open their wallets, most remain focused on necessities. Overall sales were still weak, but Gap Inc. and Costco Wholesale Corp. posted results that topped investors' expectations.

Trading has been jittery in the past two weeks because some investors who have placed big bets on a recovery are worried that the economy will have trouble pulling out of the longest recession since World War II.

By last month, major stock indicators like the Standard & Poor's 500 index had jumped more than 50 percent from 12-year lows in early March. Analysts say the latest slide was a necessary adjustment for the market, even though it erased about two weeks worth of gains. Traders become nervous if stocks climb too quickly without a break, which they see as an indicator of indiscriminate buying.

"We had a bit of reality catching up with expectations," said Bill Stone, chief investment strategist at PNC Wealth Management.

The Dow rose 63.94, or 0.7 percent, to 9,344.61.

The S&P 500 index rose 8.49, or 0.9 percent, to 1,003.24, while the Nasdaq composite index rose 16.13, or 0.8 percent, to 1,983.20.

Three stocks rose for every one that fell on the New York Stock Exchange, where volume came to a light 1.2 billion shares compared with 1.4 billion Wednesday.

Bond prices fell. The yield on the 10-year Treasury note rose to 3.34 percent from 3.31 percent late Wednesday.

Analysts say the dearth of market participants going in to the long Labor Day weekend has added to the market's choppiness.

"I wouldn't want to read too much into anything until we get into next week," said Alan Brown, group chief investment officer at Schroders in London, referring to the light trading volume.

Among retailers, Gap rose US$1.49, or 7.6 percent, to US$21.18 and Costco advanced US$4.34, or 8.6 percent, to US$54.99. Abercrombie & Fitch Co. slid US$1.11, or 3.5 percent, to US$30.98.

The dollar rose against most other major currencies, while gold prices extended their recent climb.

The Russell 2000 index of smaller companies rose 6.66, or 1.2 percent, to 562.49.



 

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