US stocks start year with gains, despite jobs report

COLD BATH::Although US unemployment fell to 9.4% last month, fewer new jobs were created than had been expected. The figures sparked only a moderate sell-off

AFP, NEW YORK

Sun, Jan 09, 2011 - Page 10

Wall Street opened the year with gains this week despite a shaky jobs report, as traders looked ahead to the start of corporate earnings season for new signs of the US economy’s health.

The momentum and optimism of recent weeks continued on the trading floor throughout the week amid strong economic data, but Friday’s monthly jobs report provided a cold bath for investors.

Over the week, the Dow Jones Industrial Average rose 0.84 percent to close Friday at 11,674.76 points, for the sixth straight week of gains.

The tech-rich NASDAQ rose 1.9 percent to 2,703.17 points, while the Standard & Poor’s 500 index, a broad measure of the market, added 1.1 percent at 1,271.50 points.

“Certainly November and December were disappointing with respect to job creation. If this trend continues, then concern for 2011 will grow, but I am not sure that anybody is yet willing to call into question their 2011 outlook,” said Dan Greenhaus, chief economic strategist at Miller Tabak.

While unemployment fell sharply to 9.4 percent last month — after rising to 9.8 percent the previous month — only 103,000 new jobs were created, well below the 150,000 forecast by analysts.

However, the disappointing unemployment data sparked only a moderate sell-off, highlighting investors’ confidence.

“I am a little surprised that the employment number this morning has not sparked more of a sell-off,” Wells Fargo Securities analyst Gina Martin said.

In company news, automakers saw their shares rise last week, after reporting strong sales for last year and a bright outlook.

GM shares were up 5.8 percent for the week and Ford shares were up 8.8 percent.

Banks also had a good week, with Bank of America shares up 6.8 percent, Citigroup up 4.4 percent and JPMorgan Chase up 2.9 percent.

The week ahead will see a fresh slew of economic indicators, including inflation and retail sales.

“We expect the next week’s data to have a positive tone,” analysts from Moody’s Analytics said.

On Wednesday, the US Federal Reserve will release its Beige Book, which reviews the economic conditions in the US for last month and the beginning of this month, ahead of the meeting of the Fed’s top policy-making body.

Traders will also keenly await Friday’s retail sales figures, which analysts forecast will show a modest increase for last month — a peak shopping season — even after a number of key retailers this week posted disappointing sales.

Investors will also focus on quarterly earnings reports from firms led by chip maker Intel, aluminum giant Alcoa and JPMorgan.

“It is pretty well baked that we are going to have another solid quarter of growth in the next quarter,” Martin said, warning that “earnings could potentially cause a little skittishness if we don’t see the top line sales come through.”