U.S. stocks edge up, score gains for the week
ReutersA job seeker fills out an application in Los Angeles in May.
SAN FRANCISCO (MarketWatch) -- U.S. equities finished modestly higher Friday, with major indexes scoring gains for the week to end at their highest levels in years as lackluster August jobs data fueled speculation that the Federal Reserve may start another round of monetary stimulus.
"The recent market rally has been the result of massive short-covering and anticipation of more liquidity courtesy of the Fed," said Jeffrey Sica, president and chief investment officer of Sica Wealth Management. "The jobs report of today reinforces the likelihood of more economic stimulus being initiated in the September meeting."
But "the market celebration will be short-lived as investors question whether another round of money printing is too little or too late to help the economy," he added.
The Dow Jones Industrial Average (DJIA) rose 14.64 points, or 0.1%, to 13,306.64. The blue-chip benchmark closed at its highest level since December 2007, with a 1.7% gain for the week.
Of the 30 Dow components, half finished higher. Shares of
The S&P 500 Index (SPX) rose 5.8 points, or 0.4%, to 1,437.92, closing up 2.2% from a week ago. It marked its highest close since January 2008. Of the 10 sectors in the index, consumer stocks led decliners, while materials led advancers.
Within the index, mining and steel companies were standouts, finding support from fresh merger talks, demand from China and higher commodity prices.
"While it looks like stocks didn't move all that much, underneath the averages there is a lot of bullish price action under way," said Michael Gayed, chief investment strategist at Pension Partners LLC.
"High beta small-cap stocks continue to meaningfully outperform, the VIX [CBOE Market Volatility Index] (VIX) continues to price poorly and defensive sectors, which money flees to in times of fear, are collapsing," he added. "Fear over a 2008 repeat is now turning into fear of global monetary shock and awe, and the potential inflationary aspects of it."
The Nasdaq Composite Index
(COMP)
inched up 0.6 point to 3,136.42, tacking on 2.3% for the week to log its highest finish since November 2000. Shares of
Jobs data disappoints
Contributing to the trading tone, the government reported that U.S. employment growth slowed sharply in August as nonfarm payrolls expanded by a seasonally adjusted 96,000 in August -- well below estimates and down from a respectable 141,000 jobs in July.
Economists surveyed by MarketWatch had expected an increase of 125,000. Read more on the jobs data.
It came as a disappointment after data released Thursday showed a drop in initial jobless claims last week, as well as the biggest jump in private-sector employment in five months. Read about the ADP numbers.
For every stock sliding in New York Friday, more than two gained on the New York Stock Exchange, where nearly 680 million shares had traded. Composite volume reached 3.7 billion.
The U.S. dollar (DXY) traded sharply lower following the weak data on payrolls, as the euro (EURUSD) rallied. Treasury prices were mostly higher. Read more on bonds.
Gold futures rallied, with the December contract (GCZ2) adding nearly $35 an ounce. Crude futures (CLV2) climbed to a close above $96 a barrel. Read more on gold.
On Thursday, the Dow and S&P 500 posted their largest one-day percentage gain since June 29, after European Central Bank President Mario Draghi followed up on his promise to protect the euro and outlined a large bond-buying plan. Read about Thursday's equities trade.
News reports Friday said German Chancellor Angela Merkel voiced support for the ECB's plans.
Still, Sica of Sica Wealth wasn't too optimistic. "The so-called solution to the European debt crisis will become controversial in the next few days as German opposition grows," he said.
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