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By Jason Simpkins
A solid U.S. jobs report – aided by some strong corporate earnings announcements – propelled stocks higher for the second-straight day, with the Dow Jones Industrial Average gaining more than 100 points. The two-day advance has boosted that key blue-chip index by 250 points.
The Labor Department said yesterday (Thursday) that new applications filed for unemployment insurance rose by 4,000 for the week ended July 28, reaching 307,000. The report said that employment conditions in the country remain strong, which bodes well for ongoing consumer spending. Some economists were predicting that the number of claims would rise as high as 310,000. The figure came in lower, however, suggesting that even under turbulent conditions, companies have been hiring at a somewhat steady pace. A troubled housing sector, spiraling credit problems and an erratic stock market have weighed heavily on investor confidence in recent days.
The government estimated that companies added 135,000 new jobs to their payrolls in July, slightly more than the 132,000 added in June. And the unemployment rate will likely hold steady at an acceptable 4.5%.
Oil closed at a record $78.21 on Tuesday, and the dollar has been shaky against foreign currencies. These concerns have yet to be fully assuaged and the total effect of the sub prime collapse remains to be seen. For these reasons, many economists fear that there may still be a pullback in spending, especially if July proves to have been a particularly busy spending month. But as long as employment remains strong, it’s likely consumers will find the courage to keep spending and investing their money.
The Dow yesterday rose 100.96 points, or 0.8%, to close at 13,463.33. The blue chip index is now just about 4% short of the record close it achieved at the start of last month. But the triple-digit swings that have become the trading-session norm over the past couple of weeks have left investors feeling unnerved. Yesterday’s reports clearly soothed some of those worries: The Standard & Poor's 500 index yesterday gained 6.39 points, or 0.4%, to finish the day at 1,472.2. And the tech-focused Nasdaq composite index climbed 22.11 points, or 0.9%, to finish the day at 2,575.98.
Some solid quarterly earnings reports buttressed the good-news feeling of the jobs report. Nokia Corp. (NYSE: NOK), the world’s biggest cell phone maker, said that its second-quarter profit more than doubled on strong sales. The Finnish company’s U.S.-traded ADRs (American Depository Receipts) soared nearly 9% to close at $30.90 each.
Another buyout deal – which helped fuel the record run of U.S. stocks so far this year - also buoyed investor confidence. Fiserv Inc. (Nasdaq: FISV) announced that it had agreed to buy CheckFree Corp. (Nasdaq: CKFR) in an all-cash deal worth about $4.4 billion, driving up CheckFree's shares $8.57, or 23.3%, to a close at $45.40 each. Fiserve shares rose 31 cents, or 0.63%, to finish the day’s trading session at $49.50.
Bond yields held fairly steady yesterday: The yield on the benchmark 10-year Treasury note remained at 4.79%, the same as late Wednesday.
But not all the news was good: In the newest bit of evidence that the nation’s credit-market problems are widening, Accredited Home Lenders Holding Co. (Nasdaq: LEND), a non-bank mortgage lender, revealed in a filing yesterday that its business is in jeopardy. Its shares closed down more than 35%, and at one point during the day were down 41%.
