Stocks Close Higher for Second Week
Stocks closed higher for a second straight week yesterday as investors shrugged off disappointing jobless numbers and growing political tensions in North Korea and Iraq.
The two-week rise follows a dismal December, the worst since 1931. Trading this week was volatile and heavy, as investors attempted to digest the potential impact of Bush's tax cut proposals, the possibility of a war in Iraq and North Korea, the threat of rising oil prices because of political unrest in Venezuela, and the latest economic news.
The Dow Jones industrial average closed at 8784.89, up 8.71 points, or 0.1 percent yesterday, and 2.1 percent higher for the week. The Nasdaq composite index closed at 1447.72, up 9.26 points, a gain of 0.6 percent yesterday and 4.4 percent for the week. The Standard & Poor's 500-stock index ended the day where it began, at 927.57, and rose 2.1 percent for the week.
Stocks dropped sharply at the opening after the Labor Department announced that employers eliminated more than 100,000 jobs last month, reducing payrolls to their lowest level since the recession began in early 2001. But then the markets began to recover, led by technology stocks, which rose after several analysts indicated that spending on technology may improve.
"I think the economic data this morning was disappointing but not alarming," said Robert Barbera, chief economist at ITG/Hoenig. He said the decline in payrolls could largely be attributed to the plunge in retail employment, and he noted that investors already knew Christmas sales were disappointing.
Other economists said the low level of hiring, in part, reflected productivity growth, which enabled companies to produce more goods and services without hiring more people.
The Bush administration's statement that it was ready to enter into direct talks with North Korea and to begin mediation to end the political turmoil in Venezuela helped calm jittery investors somewhat, according to analysts. Investors have also factored in the potential of geopolitical problems in many of their investments, analysts said.
"This same kind of news a few months back would have been very damaging. But today everyone is hunkered down and focused on risk," said James Paulsen, chief investment officer at Wells Capital Management. "The market's getting into a mood where good news puts it up a couple hundred points and bad news just makes it stay flat. That's a much better position sentiment-wise."
Cisco Systems rose 27 cents, to $15.22, after analysts said companies may start upgrading their networking systems. Nortel Networks, a phone equipment company, rose 20 cents, to $2.35. Intel rose 36 cents, to $17.42.
"Investors are optimistic about the first quarter," said Arthur Hogan, chief market analyst at Jefferies & Co. "They're pricing in future economic activity and corporate earnings and discounting news that's coming out today."
One sector down yesterday was health care, after UBS Warburg downgraded the industry. Community Health Systems, LifePoint Hospitals and Triad Hospitals all slid more than 7 percent Other Indicators
• The New York Stock Exchange composite index fell 0.54, to 5209.80; the American Stock Exchange index rose 0.81, to 833.44; and the Russell index of 2,000 small stocks rose 0.50, to 396.44.
• There were about as many advancing issues as there were declining stocks on the NYSE, where trading volume fell to 1.5 billion shares, from 1.57 billion on Thursday. On the Nasdaq, advancers outnumbered decliners by 6 to 5, and volume totaled 1.62 billion shares, down from 1.64 billion.
• The price of the Treasury's benchmark 10-year note rose $1.88 per $1,000 invested, and its yield fell to 4.14 percent, from 4.17 percent late Thursday.
• The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 119.21 yen, down from 119.40 yen late Thursday, and a euro bought $1.0572, up from $1.0487.
• Light, sweet crude oil for February delivery settled at $31.68 a barrel, down 31 cents, on the New York Mercantile Exchange.
• Gold for current delivery rose on the Commodity Exchange division of the New York Mercantile Exchange to $354.50 a troy ounce from $353.30 on Thursday.