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Brighter mood raises stocks

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NEW YORK — Stocks rose strongly Friday as investors welcomed the latest indication that the economy is slowing enough to prevent more interest rate increases. The brightening mood particularly helped banks and retailers.

The Dow Jones industrial average rose 154.51 at 10,635.98.

Broader stock indicators also gained. The NASDAQ composite index rose 62.63 to 4,023.20 and The Standard & Poor's 500 index was up 22.23 at 1,478.90.

For the week, the Dow gained 188.09 and the NASDAQ added 57.09.

Stocks turned robust Friday after the Labor Department reported that American businesses added fewer jobs than expected in June. That's the clearest evidence yet that the Federal Reserve is succeeding in its campaign to keep the economy from overheating.

Businesses added 206,000 jobs last month after cutting 165,000 positions in May, the Labor Department said. The unemployment rate fell to near a 30-year low of 4 percent.

The central bank's six interest rate increases in the past year — along with fears more may be necessary — have cooled investor enthusiasm for many stocks in 2000.

But with businesses adding fewer jobs, and demand for housing and automobiles ebbing, Wall Street is feeling more comfortable with the notion that the Fed is bringing the high flying U.S. economy in for a soft landing. As a result, investors are betting the central bank is just about done raising rates for the rest of the year.

"There is a perception that the economy has slowed," Steven Goldman, market strategist for Weeden & Co. of Greenwich, Conn. "There is a feeling in the market that we are in the 8th inning of interest rate rises," he said. "And that's put stocks in a pre-emptive mode."

An improving outlook for interest rates put a glow on financial companies, which benefit from steady or declining interest rates. Chase Manhattan rose $2.063 to $50.063, and BankAmerica rose $1.438 to $47.438.

Big retailers gained with the expectation that steadier interest rates will fuel consumer buying. That included Home Depot, up $4.125 at $55.375, and Wal-Mart, up $4.688 to $61.875.

The positive jobs report helped calm the market, which has been jittery over the past week ahead of second-quarter earnings reports due out beginning next week.

The jobs report is one of the most important economic barometers the Fed uses to determine the fate of interest rates.

Other big gainers on the stock market Friday included Texas Instruments, up $1.50 at $68.625; and Gateway, up $5.188 at $61.938.

Qualcomm bucked the upward trend, slipping $5.063 to $56.625 on a report that Korean wireless operators would not use technology from the telecom company. Yahoo also slipped $5.875 to $116.50.

Deutsche upgraded online recruiter Hotjobs.com, which jumped $3.125 or 24 percent to $15.938.

Advancing issues outnumbered declining ones by a 9-to-5 margin on the New York Stock Exchange, where composite volume came to 1.13 billion shares, up from Thursday's pace.

The Russell 2000 index rose 4.90 to 528.22.

Overseas, Japan's Nikkei stock average rose 0.7 percent, Germany's DAX index was up 1.5 percent, Britain's FT-SE 100 was up 1.2 percent, and France's CAC-40 was up 1.7 percent.

On the Net: New York Stock Exchange: www.nyse.com.

NASDAQ Stock Market: www.nasdaq.com