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Stronger Jobs, Services Reports Send Stocks Higher

Monday, 05 Apr 2010 01:30 PM

 

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Stocks rose Monday after an increase in hiring and improved demand at services businesses raised expectations for the economy.

The Dow Jones industrial average rose 40 points in afternoon trading and neared the psychological benchmark of 11,000 for the first time in 18 months. The growing confidence about the economy hurt demand for Treasurys and drove up interest rates. The yield on the 10-year Treasury note briefly rose to 4 percent, its highest level since June.

The Labor Department said Friday that employers added 162,000 jobs in March. It was the biggest gain since the recession began in December 2007. However, the number was smaller than the 190,000 jobs economists forecast. The stock market was closed Friday so investors didn't have a chance to trade on the report before the weekend.

Stocks are also rising following an increase in activity in U.S. services industries and a gain in pending home sales.

The Institute for Supply Management, a trade group, said that its index of activity in the nation's service industries rose in March to 55.4 from 53 in February. Economists had forecast a reading of 54. The growth in the service index is the fastest since ISM revised how it measured the industry in January 2008.

Meanwhile, the National Association of Realtors said its seasonally adjusted index of sales agreements rose 8.2 percent in February from January.

The reports added to expectations that the economy is making strides.

"The investors that have been buying over the past year are getting rewarded for their expectations that the economy is going to make a turn," said Alan Lancz, money manager at Alan B. Lancz & Associates in Toledo, Ohio.

The government said that private employers accounted for most of the gains in jobs last month. Temporary government hiring for the 2010 U.S. census did not pad the figures as much as economists had forecast. The unemployment rate remained at 9.7 percent for the third straight month.

High unemployment keeps consumers from spending and loan defaults elevated. The financial industry would get a big boost from a drop in loan losses. Consumer spending accounts for the majority of economic activity in the country.

In early afternoon trading, the Dow rose 38.84, or 0.4 percent, to 10,965.91. The Dow hasn't traded above 11,000 since Sept. 29, 2008.

The broader Standard & Poor's 500 index rose 7.89, or 0.7 percent, to 1,185.99. The Nasdaq composite index rose 22.72, or 1 percent, to 2,425.30.

The economic numbers pushed Treasury prices lower. The yield, which moves opposite its price, rose to 3.99 percent from 3.94 percent late Friday. It has not topped 4 percent since June. The bond market had a shortened trading day Friday.

An increase in interest rates could hurt the economy by raising borrowing costs. The yield on the 10-year note is tied to mortgages and other consumer loans.

The dollar fell against other major currencies, while gold rose.

Crude oil rose $1.72 to $86.59 per barrel on the New York Mercantile Exchange.

Three stocks rose for every one that fell on the New York Stock Exchange, where volume came to a light 413.9 million shares, compared with 444.1 million shares traded at the same point Thursday.

The Russell 2000 index of smaller companies rose 9.89, or 1.5 percent, to 693.87.

Overseas, Japan's Nikkei stock average rose 0.5 percent. European markets were closed for the Easter holiday.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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