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Market indices go up

07 September 2009 08:04 (UTC +04:00)

Baku- APA-Economics. Investors looked past a jump in the nation’s unemployment rate and focused on a drop in the number of layoffs as a reason to push stocks higher.
The Dow Jones industrial average jumped 75 points in afternoon trading Friday, but traders said the very thin trading volume before the long holiday weekend made it difficult to conclude that a broad shift in investor sentiment was occurring. Markets will be closed on Monday for Labor Day.
The Labor Department reported a slower pace of job losses last month but also an increase in the unemployment rate to 9.7 percent â€” the highest since June 1983.
Analysts had been expecting the rate to increase to 9.5 percent after unexpectedly dipping to 9.4 percent in July. Most economists expect the unemployment rate to top 10 percent by early next year.
The report found that employers cut 216,000 jobs last month, fewer than the 276,000 lost in July and better than the 225,000 figure analysts had been expecting. It was the lowest level of job losses in a year, and traders said it was an encouraging sign that the labor market could righting itself.
"The overall picture is things are getting better," said Ryan Larson, senior equity trader at Voyageur Asset Management.
Rising unemployment is widely seen as the economy’s biggest hurdle to recovery, and concerns about it have been weighing on the stock market. As long as job losses remain high, consumers won’t feel comfortable about spending money, which the U.S. economy badly needs in order to resume growth.
"The market is looking at directional changes and so at this state of the economic recovery I think the fact that you see unemployment rising shouldn’t be that surprising," said Thomas K. R. Wilson, managing director, institutional investments group, Brinker Capital in Berwyn, Pa.
Stock trading has been erratic over the past few weeks as a six-month rally has slowed on worries that the market’s rise of more than 50 percent since March has been overdone.
In late afternoon trading, the Dow rose 84.34, or 0.9 percent, to 9,428.95. The Standard & Poor’s 500 index rose 11.42, or 1.1 percent, to 1,014.66, while the Nasdaq composite index added 31.21, or 1.6 percent, to 2,014.41.
Three stocks rose for every one that fell on the New York Stock Exchange, where volume came to a light 712.4 million shares compared with 780.4 million shares traded at the same point Thursday.
"This all comes on very little volume today, so I wouldn’t put much on this because there is very little conviction," Larson said.
Some analysts said the market appeared to be overreacting to the jobs numbers.
Dan Cook, senior market analyst at IG Markets in Chicago, said the economy isn’t strong enough to support the market at its current levels. "Employers are not going to be looking to add to staffs any time soon," he said.
There were signs that investors were becoming less fearful after a four-day slide in stocks that ended Thursday. The drop included a 186-point plunge on Monday that came on fears of worries about the health of banks and the overall economy.
The Chicago Board Options Exchange’s Volatility Index â€” known as the market’s "fear index" â€” fell 6.9 percent to 24.2. It’s down 36.9 percent in 2009 and its historical average is 18-20. It surged to a record 89.5 in October at the height of the financial crisis.
Demand for the safety of government debt fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.44 percent from 3.35 percent late Thursday.
In other trading, the dollar was mixed against other major currencies, while gold prices retreated after hitting a six-month high of near $1,000.
Light, sweet crude rose 6 cents to settle at $68.02 a barrel on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies rose 4.25, or 0.8 percent, to 566.74.
Overseas, Britain’s FTSE 100 rose 1.2 percent, Germany’s DAX index rose 1.6 percent, and France’s CAC-40 added 1.3 percent. Japan’s Nikkei stock average fell 0.3 percent. Source: AP