Stocks shake off earlier loss to close higher
Stocks closed modestly higher on Friday, ending three days of losses, after the U.S. government's disappointing jobs report added to speculation that the Federal Reserve might keep interest rates low for another year.
Investors were also weighing tepid U.S. earnings reports and persistent weakness in the global economy.
The Dow Jones industrial average rose 79.92 points, or 0.5 percent, to 17,740.63. The Standard & Poor's 500 index rose 6.51 points, or 0.3 percent, to 2,057.14 and the Nasdaq composite rose 19.06 points, or 0.4 percent, to 4,736.16.
The three major indexes ended the week slightly lower, despite Friday's gains.
Stocks started the day lower after the Labor Department said U.S. employers created just 160,000 jobs last month, significantly below the 200,000 that economists were expecting.
While one month does not make a trend, there have been a few reports this week from around the world that suggested weakness in the global economy. A closely watched Chinese manufacturing survey showed production contracted last month, and European Union officials trimmed their forecasts for growth across the 19 countries that use the euro.
"Once again, we received evidence that the U.S. economy is just bumbling along and will most likely remain so until after the U.S. presidential election," said Tom di Galoma, a managing director of fixed income at Seaport Global.
As the day progressed, stocks turned higher in the early afternoon and stayed there the rest of the day. In a way, the bad news of the jobs report is good news for stock market investors, who have benefited from more than seven years of extremely low interest rates. Low interest rates make stocks look cheaper when compared to bonds.
Di Galoma and others said that the April jobs report significantly reduces the possibility that the Federal Reserve will interest rates in June or even later this year.
"In my view, a rate hike potential this year is nearing zero probability," he said.
That view appears to be widely held. Fed fund futures, which are securities that allow traders to bet on which way the Fed will move interest rates, show that a majority of investors do not expect the Fed to raise rates until February 2017.
"The weakening of jobs growth, should it persist as we think it will, will make the Fed's job more challenging this year, and any rate hikes will occur at a much slower pace than originally anticipated at the start of the year, and may not happen at all," said Rick Rieder, BlackRock's chief investment officer of fixed income.
Immediately after the release of the jobs report, bond prices jumped and interest rates moved sharply lower, but as the day wore on, the market reversed course. U.S. government bond prices ended lower, and the yield on the benchmark U.S. 10-year Treasury note rose to 1.78 percent from 1.74 percent the day before.
The euro rose to $1.1401 from $1.1398 and the dollar declined to 107.13 yen from 107.25 yen.
In company news, payment processor Square sank $2.83, or 22 percent, to $10.22. The company, run by Twitter founder Jack Dorsey, reported a larger than expected quarterly loss and reported sharply higher expenses.
In commodities, benchmark U.S. crude oil rose 34 cents to close at $44.66 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, climbed 36 cents to close at $45.37 a barrel in London.
Wholesale gasoline rose less than 1 cent to $1.496 a gallon, heating oil rose 1 cent to $1.337 a gallon and natural gas rose 2.5 cents to $2.101 per thousand cubic feet.
Gold rose $21.70 to $1,294 an ounce, silver rose 20 cents to $17.53 an ounce and copper was unchanged at $2.15 a pound.
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