Wall Street stocks closed the week on a positive note thanks to a late-afternoon rally on Friday, but a weak US jobs report added to worries that the economy is slowing.
The late surge lifted stocks into positive territory for the week, with the Dow Jones Industrial Average finishing up 157.7 points (0.97 percent) at 16,472.37.
The broad-based S&P 500 rose 20.02 (1.04 percent) to 1,951.36, while the tech-rich NASDAQ Composite Index advanced 21.20 (0.45 percent) to 4,707.78.
Photo: Reuters
The benign tally belied rising pessimism that the US economy will not escape the ripple effects of a slowing China and a continually sluggish Europe.
Some leading analysts still see US stocks regaining some momentum in the final months of this year. The Goldman Sachs Group Inc forecasts the S&P 500 will return to 2,000 at the end of the year after suffering its steepest drop in four years in the third quarter.
However, analysts expressed alarm over Friday’s jobs report. The US Department of Labor estimated the US economy added just 142,000 jobs last month, well below analyst estimates of 205,000. The government also trimmed its estimates for jobs added in July and August.
The jobs report “would indicate fairly strongly the US economy is slowing more significantly than expected,” Hugh Johnson Advisors founder Hugh Johnson said. “The word ‘recession’ is starting to come into the dialogue.”
Meeschaert Capital Markets president Gregori Volokhine said the weak jobs report added to other lackluster data points, such as an Institute for Supply Management reading that showed near-flat manufacturing activity last month.
“We are beginning to understand why [US Federal Reserve Chair] Janet Yellen was scared to raise interest rates” at last month’s policy meeting, Volokhine said.
Not all of the week’s US economic data was bad. The Conference Board’s consumer confidence index rose last month from 101.3 in August to 103, beating market expectations for a sharp drop in confidence.
In another positive sign, auto sales last month from carmakers showed cars in the US continued to be bought at a brisk pace. Lightweight vehicle sales last month jumped 15.8 percent from a year ago to 1.44 million, lifting the pace of sales to the fastest since July 2005, according to Autodata.
However, data outside the US continued to paint a gloomy picture abroad, raising worries of contagion.
China’s crucial industrial companies saw profits fall by 8.8 percent in August from a year ago, while eurozone inflation again slipped into negative territory (minus-0.1 percent) last month.
“There’s a lot of fear in the market,” Volokhine said.
In corporate news, Alcoa Inc announced plans to split itself into two companies, one focused on upstream mining and smelting and the other on manufacturing aluminum products to supply industries including aerospace and auto manufacturing.
In other deal news, Energy Transfer Equity said it would acquire the Williams Companies Inc for about US$37.7 billion to create a giant in US oil and gas pipelines, while data-storage company Western Digital Corp announced that Chinese technology company Unisplendour Corp (紫光) is to pay US$3.78 billion for a 15 percent stake in the US company.
Ralph Lauren, the 75-year-old founder of his namesake company, announced he would step aside as chief executive and hand over the top executive post to Stefan Larsson, global president of the Old Navy brand for Gap Inc.
Next week’s calendar includes a handful of early earnings reports, including PepsiCo Inc, Alcoa and Monsanto Co Inc.
Key economic reports include the Institute for Supply Management reading of services sector activity for last month, US trade data for August and the minutes from last month’s Fed monetary policy meeting.
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