Dow Closes above 11,000 for First Time since May
New York (AP) - The Dow Jones industrial average closed above 11,000 for the first time in five months Friday as hopes built that the Federal Reserve will take more action to get the economy going again.
A weaker jobs report added to a series of tepid economic indicators in recent weeks that have built expectations that the Fed will announce new steps to encourage borrowing when it meets in early November.
Private employers added 64,000 workers last month, short of the 75,000 economists expected, according to a monthly government report released early Friday. Overall, 95,000 jobs were slashed as governments laid off workers, including temporary census employees. The unemployment rate held steady at 9.6 percent.
Jason Pride, director of investment strategy at wealth management firm Glenmede, said that the weak report gives the Fed "the window of opportunity to take action."
The Fed's goal, if it starts buying bonds again, would be to drive interest rates down further from their already low levels and spark borrowing and spending. Lower rates could also eventually drive investors into riskier assets like stocks or into currencies in countries with more attractive interest rates.
According to preliminary calculations, the Dow rose 57.90, or 0.5 percent, at 11,006.48. The last time it crossed above 11,000 was May 3 of this year. It first crossed 11,000 in May of 1999, and reached its highest close of all time on Oct. 9, 2007, when it finished at 14,164.53.
The Standard & Poor's 500 index gained 7.09, or 0.6 percent, to 1,165.15, and the Nasdaq composite index gained 18.24, or 0.8 percent, to 2,401.91.
Employers have not started hiring a lot of workers because of worries about potential tax hikes and unknown costs associated with health care and financial regulatory reform passed earlier this year. Consumers have also kept their spending down, which has kept a lid on hiring.
In corporate news, Alcoa Inc. rose 5.7 percent after its earnings beat analysts' expectations late Thursday. The aluminum maker also raised its forecast for global aluminum consumption. Many companies have said international operations will be the driving factor in improving profits in the coming quarters because U.S. growth is so slow.
Alcoa is seen as a bellwether for earnings season because it is the first company among the 30 that make up the Dow industrials to report earnings. Alcoa rose 69 cents to $12.89.
Earnings are likely to become more of a factor in the market's direction in the coming weeks as hundreds of companies report results.
Carole Peck, president and founder of Carole Peck Financial Center, said "if we see positive earnings, and projections for the fourth quarter are fairly decent, that should play positively."
Strong earnings results and upbeat corporate outlooks drove the Dow up 7.1 percent in July.
About three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 945 million shares.