Job News Lifts Stocks as Bond Yields Surge

A better-than-expected employment report sent stocks higher Friday, allowing Wall Street to extend a rally driven by a steady stream of positive economic news.

But the rally in blue chips was held back by another surge in Treasury bond yields, analysts said.

Tech stocks had a strong day, and the Nasdaq composite index closed just below its high for the session.

The Dow Jones industrial average closed up 47.12, or 0.5%, at 10,572.49, for a five-day gain of 203 points, or nearly 2%.

The Dow had been up as much as 138 points Friday.

“We’ve had a very nice run. But now we’re hesitating a little bit,” said Charles White, portfolio manager at Avatar Associates. “This is the market’s way of telling you that it needs more information, more certainty about the economy and [corporate] earnings before it’s going to break out much further.”

Broader indicators also rose, with the technology-focused Nasdaq composite index advancing 48.04 points, or 2.6%, to 1,929.67. The Standard & Poor’s 500 index gained 0.6%.

Advancing shares led decliners 5 to 4 on the New York Stock Exchange and 23 to 13 on Nasdaq.

For the week, Nasdaq rose 7%, and the S&P; added 2.9%.

The gains were the latest in a series of advances on upbeat economic news. Wall Street reacted positively to a Labor Department report Friday showing the nation’s unemployment rate slipped to 5.5% in February. Businesses added 66,000 new jobs, breaking a string of losses that averaged 146,000 a month since the recession started in March 2001.

“For unemployment to be improving this quarter, earlier than expected, is very encouraging,” said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum. “It gives us the continuing story that the economy has turned the corner.”

Tech stocks were helped by announcements from two bellwethers: Intel rose $1.19 to $34.17 after forecasting first-quarter revenue in line with expectations. And Sun Microsystems jumped $1.17 to $10 after the computer hardware and software maker said it expected to return to profitability in the spring quarter.

Among other tech issues, Brocade Communications rose $2.54 to $29.48, QLogic jumped $4.70 to $51.36, and PeopleSoft gained $3.35 to $36.59.

Blue chips were mixed, as rising bond yields gave some investors pause. The 10-year Treasury note yield jumped to an eight-month high of 5.32% from 5.22% on Thursday, as bond traders dumped Treasuries, fearing a strong economy may mean tighter credit soon.

Still, many financial stocks were higher, including American Express, which gained 96 cents to $40.47, and Bank of America, up 85 cents to $67.83.

General Motors, which has run up about 16% in the last two weeks, retreated, falling 70 cents to $60.71.

Analysts said investors were shifting into technology after spending most of the last two weeks focused on blue chips. Although technology has advanced, its gains have been more modest than those of so-called old-economy stocks.

The blue chip Dow is up 5.5% for the year. By contrast, the Nasdaq is still down 1.1%.

Although the market’s tone has improved considerably in recent sessions, as investors start thinking about buying stocks again, there is still a lot of hesitance, analysts say.

With some stocks at their highest prices this year, many would-be buyers are nervous that the market might be advancing too quickly. They want to see more evidence that corporate profits are strengthening when first-quarter reports come out next month.

Overseas, Japan’s Nikkei stock average closed up 2% at 11,885.79, continuing its powerful rebound. The Nikkei rocketed 9.9% for the week and is up 12.7% this year.

The yen weakened after surging against the dollar Thursday. The yen ended at 128.38 to the dollar, versus 127.05 Thursday.

Market Roundup, C4-5