Saturday, June 03, 2000
Markets climb as job rate slows
By Amy Higgins
The Cincinnati Enquirer
Just when you thought the volatility in technology stocks was over, the tech-heavy Nasdaq Composite Index climbs 608.27, or 19 percent, this week.
The index's best week in its 29-year history came as a government report showed new jobs and wages grew less than expected in May. The report boosted optimism that the Federal Reserve will limit further interest-rate increases and keep the record nine-year economic expansion going.
The Labor Department said the overall increase in payrolls of 231,000 in May, on a seasonally adjusted basis, came totally on the government side, reflecting the hiring of 357,000 temporary Census workers.
Private businesses cut jobs by 116,000 last month, on a seasonally adjusted basis, the most in nine years, with the biggest declines coming at retail establishments, manufacturing companies and construction sites.
In addition, the unemployment rate rose to 4.1 percent from 3.9 percent. In a separate report, factory orders also dropped.
“We got a couple of economic indicators indicating the economy may be slowing down,” said Fred Brink, equity analyst at Johnson Investment Counsel in Monfort Heights. “And money start ed coming out of more defensive areas.”
As investors shifted their money from energy and health-care stocks back to tech and financial stocks, the Nasdaq gained 230.88 points Friday to close at 3813.38. The one-day gain was the index's third-largest point increase and the fifth-largest percentage gain. The index had its largest one-day gain, 7.9 percent, Tuesday. Five of Nasdaq's 10 biggest days have been since mid-April.
The surge reduced the index's year-to-date loss to 6.3 percent and the drop from its March 10 record of 5048.62 to 24 percent. The Nasdaq still has far to go before recovering from its low of 3164.55 last month.
The Standard & Poor's 500 Index rose 28.45, or 2 percent, to 1477.26, giving the index a positive return for the year for the first time since April 25. Technology stocks including Cisco Systems Inc. led the advance.
The Dow Jones Industrial Average climbed 142.56, or 1.3 percent, to 10,794.76. More than two stocks rose for every one that fell in the Big Board. The nation's 20 most-active stocks all gained.
About 1.2 billion shares changed hands on the NYSE, above the three-month daily average of 1 billion. About 1.9 billion shares traded on the Nasdaq Stock Market.
The S&P 500's 7.2 percent advance put it up 0.6 percent for the year. The Dow gained 4.7 percent this week, cutting its loss in 2000 to 6.1 percent.
The Russell 2000 Index of smaller stocks gained 12.2 percent this week, its biggest weekly climb.
The Labor Department also said average hourly earnings gained 0.1 percent in May.
Economists surveyed by Bloomberg Business News had forecast an unemployment rate of 3.9 percent and a rise of 0.4 percent in earnings. The creation of 231,000 jobs in May compared with forecasts of 378,000.
Higher interest rates hurt stocks by reducing the amount investors are willing to pay.
The Associated Press and Bloomberg Business News contributed to this report.
Housing crunch snares middle-income families
Cinergy official resigns
Kroger's attempt at Winn-Dixie buyout halted
Markets climb as job rate slows
Savvy Strategies
The Sophisticated Investor
Venture capitalists to mingle with e-start-ups at conference
The In Basket
What's the Buzz?
