Stocks End Higher Following Jobs Report

Traders work on the floor of the New York Stock Exchange before the closing bell Monday, Oct. 1, 2007 in New York. Wall Street began the fourth quarter with a huge rally Monday, sending the Dow Jones industrial average above 14,000 and well into record territory for the first time in 2 1/2 months. Stocks were buoyed by a growing belief that the worst of the credit crisis has past. (AP Photo/Mary Altaffer) (Mary Altaffer - AP)

The stock market's advance was reminiscent of a big rally Monday in which the Dow first moved back above 14,000 after a pullback of several months. Comments from Citigroup Inc. Monday that its business could rebound in the current quarter buoyed the market. Investors then gave back gains in subsequent sessions as they awaited the employment reading.

The employment report and news from Citi and other financial companies calmed the market's concerns about the economy.

Wall Street was forced to examine the ramifications of credit market tightness and a slumping housing market on the banking sector again Friday. Merrill Lynch & Co. warned of a loss in the third quarter, and Washington Mutual Inc. forecast sharply lower profit due to problems stemming from turmoil in the mortgage market.

Merrill rose $1.89, or 2.5 percent, to $76.67, and Washington Mutual rose 79 cents, or 2.2 percent, to $36.07 as many investors expect the financial institutions' businesses will return to more normal levels.

Part of the financial upheaval that has hurt some financial houses has also pulled the dollar down sharply in recent weeks, a decline hastened by the Fed's last rate cut. With the employment reading still leaving room for a rate ease in some investors' eyes, the dollar finished mixed against other major currencies. Lower interest rates would make the dollar a less attractive investment.

Meanwhile, gold prices rose and light, sweet crude settled down 22 cents at $81.22 per barrel on the New York Mercantile Exchange.

Fed funds futures are pricing in a rate reduction of a quarter percentage point by the end of the year _ signaling the Fed would likely act at either its October or December meetings.

"There is not enough ammunition for another ease in October," Marta said, pointing to decent economic readings seen in recent weeks. "Maybe the Fed really had it right because they talked about forestalling economic fallout from the financial crisis," he said of the reasoning behind last month's cut.

"It's not like the economy is going gangbusters here but the reason the Fed tightened up through mid-2006 was to slow this economy down without breaking it and I think the employment data we've seen suggest they did a pretty darn good job of that."

In corporate news, aluminum maker and Dow component Alcoa Inc. said it expects to book charges on the planned sale of its packaging and consumer products businesses as well as restructure its electrical and electronic solutions segment. Alcoa rose $1.13, or 3 percent, to $38.79.

BlackBerry maker Research In Motion Ltd. rose $12.83, or 12.8 percent, to $113.37 after reporting its profit and revenue more than doubled in its fiscal second quarter on strong growth in its subscriber base.

Advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange, where consolidated volume came to 2.93 billion shares compared with 2.66 billion traded Thursday.