Sun, Sep 08, 2013 - Page 15 News List

US stocks rise despite Syria, jobs report

UNCERTAINTY:Disappointing job numbers last month may lead the Fed to delay plans to taper its bond-buying program, while the Syria threat remains, experts said

AFP, NEW YORK

Strong auto sales, revived merger and acquisition activity and an expected product launch from Apple helped propel stocks higher in a week that also featured some major headwinds.

Despite uncertainty over Syria and a disappointing jobs report at the week’s close, all three leading indices posted gains for the holiday-shortened week.

The Dow Jones Industrial Average rose 112.19 (0.76 percent) to 14,922.50. The broad-based S&P 500 advanced 22.20 (1.36 percent) to 1,655.17, while the tech-rich NASDAQ Composite Index tacked on 70.14 (1.95 percent) at 3,660.01.

Markets were closed on Monday for the US Labor Day holiday.

The week’s gains were a big improvement over last month, which saw the steepest monthly declines for the Dow and S&P 500 since May last year.

Perhaps the week’s biggest bright spot was US auto sales last month, which showed the industry sold 17 percent more cars than a year ago. General Motors, Ford and Chrysler all posted double-digit gains.

The robust auto sales lifted stocks on Wednesday and “spilled over into better sentiment in general,” said Michael James, managing director of equity trading at Wedbush Securities.

Markets also digested Monday’s news that Verizon would buy out Vodafone’s 45 percent stake in their Verizon Wireless joint venture for US$130 billion. Verizon plans a record US$25 billion debt offering associated with the deal in the next week or two, a person close to the situation said.

On Tuesday, Microsoft turned heads when it announced a US$7.2 billion acquisition of Nokia’s handset business in a bid to become a bigger player in the smartphone business.

Some analysts see increased merger and acquisition activity as a sign of rising confidence in the economy.

Analysts were also cheered by an invitation from Apple announcing an event on Tuesday in California. The gathering is widely expected to be an announcement of the launch of two new versions of the iPhone, including a less expensive model expected to appeal to China and other emerging markets.

On Friday, the Wall Street Journal reported that Apple was preparing to ship iPhones to China Mobile (中國移動) in a long-anticipated deal. Apple closed the week 2.3 percent higher at US$498.22.

The news on autos, telecoms and Apple helped offset Friday’s disappointing jobs report. The US Department of Labor reported a gain of 169,000 jobs last month, below the 177,000 projected by analysts. The report also slashed the jobs estimates for June and July.

The report, while “not a disaster,” was weak enough to suggest that the US Federal Reserve will either delay its plans to taper its bond-buying program, or reduce the program even more gradually than previously thought, said William Lynch, director of investment at Hinsdale Associates.

“I don’t think the economy, as sluggish as it is, can take too much in the way of tapering,” Lynch said.

Investors are also skittish over the efforts of US President Barack Obama’s administration to launch a military strike on Syria in response to Syria’s purported use of chemical weapons.

Crude oil prices on Friday rose to a 28-month high of US$110.53 in New York amid US-Russian tensions over Syria, but equity markets have reacted inconsistently to Syria news, sometimes dropping in recent weeks on Syria headlines, and sometimes not.

“Of all the risks out there, the one that has the highest probability to hurt the market in the near term is the Middle East situation,” said Scott Wren, senior equity strategist at Wells Fargo Advisors.

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