Wall Street Closes Sharply Higher As Traders Shrug Off Weak Jobs Data

(RTTNews) - After showing substantial weakness for much of Friday's session, stocks closed well above the unchanged line, as investors went bargain hunting. The major averages shrugged off early weakness, accelerating to the upside in the latter part of the trading day.

The initial weakness came following the release of disappointing employment data and the markets were held lower as the CEOs from the big three automakers went through the second part of their testimony in front of the House Finance Committee.

Before the start of trading, a report from the Labor Department showed that employment fell by 533,000 jobs in November, marking the biggest one-month drop in employment since December of 1974. Economists had been expecting employment to fall by a more modest 325,000.

Following the release of the report, Secretary of Labor Elaine Chao said that the latest job statistics show the need to bring stability to the financial markets. She also encouraged people that have been laid off to use government resources to help find new jobs.

Commerce Secretary Carlos Gutierrez also commented on the disappointing report, saying that the government is doing all it can to support the economy in the face of "very disappointing" employment statistics, arguing that restoring stability to credit markets will allow businesses to begin to hire again.

"Business can't hire, businesses can't expand, unless they have access to credit," Gutierrez said in an interview with RTTNews.

The Commerce Secretary said credit conditions are likely to get better early next year, but said "we are going to go through some difficult months in the meantime."

In other news, the chief executives of the nation's biggest automakers were once again on Capitol Hill, pleading with lawmakers for a government bailout. While many in Congress remain skeptical, the weak employment data could raise fears about the impact that a collapse of the auto industry would have on the labor market.

The major averages saw some further upside going into the close, ending the session near their best levels of the day. The Dow closed up 259.18 points or 3.1 percent at 8,635.42, the Nasdaq closed up 63.75 points or 4.4 percent at 1,509.31 and the S&P 500 closed up 30.85 points or 3.7 percent at 876.07.

Despite Friday's gains, the major averages all closed lower for the week due largely to the substantial sell off that was seen on Monday. While the Dow fell 2.2 percent for the week, the Nasdaq and the S&P 500 posted weekly losses of 1.7 percent and 2.3 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region closed mixed on Friday, with Japan's Nikkei 225 Index closing slightly lower while Hong Kong's Hang Seng Index closed up 2.5 percent.

Meanwhile, the major European markets ended the day near their lows of the day. The French CAC 40 Index and the German DAX Index closed down 5.5 percent and 4.0 percent, respectively, while the U.K.'s FTSE 100 Index ended the session with a loss of 2.7 percent.

In the bond market, treasuries came under pressure in late-day trading, ending the session just off their lows. Subsequently, the yield on the benchmark ten-year note closed up 8.7 basis points at 2.657 percent.

With the turnaround by the broader markets, most of the major sectors indices ended the day sharply higher after lingering in negative territory for much of the trading session.

Some of the strongest performances of the day came out of the brokerage sector, with the Amex Securities Broker/Dealer Index closing up 11.1 percent. Ameriprise Financial (AMP | Quote | Chart | News | PowerRating) helped to lead the way higher, closing up 26.9 percent, at a one-month closing high.

Airline stocks also moved sharply higher over the course of the trading day, contributing to a 9.1 percent gain by the Amex Airline Index. With the gain, the index ended the session at its best closing level in almost a month.

The strength in the oil-sensitive airline sector came amid a continued decrease by the price of oil, with crude for January delivery closing down $2.81 at a four-year low of $40.81 a barrel.

Significant strength also emerged in a variety of other sectors, with some real estate, health insurance, and banking stocks posting notable gains.

Several key economic reports are due to be released next week, including reports on retail sales and wholesale price inflation. Traders are also likely to keep an eye on reports on pending home sales, the trade deficit, and consumer sentiment.

In corporate news, quarterly results are due out from H&R Block (HRB | Quote | Chart | News | PowerRating), National Semiconductor (NSM | Quote | Chart | News | PowerRating), AutoZone (AZO | Quote | Chart | News | PowerRating), and Costco (COST | Quote | Chart | News | PowerRating).

For comments and feedback: contact editorial@rttnews.com Copyright(c) 2008 RealTimeTraders.com, Inc. All Rights Reserved

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index