Stocks Rally as Pace of Layoffs May Be Slowing
Friday, May 8, 2009; 4:51 PM
Investors, cheered by data showing that the pace of job losses in the United States might be moderating, pushed stock markets higher today.
The blue-chip Dow Jones industrial average rose 2 percent, or 165 points, while the broader Standard & Poor's 500-stock index was up 2.4 percent, or 22 points. The tech-heavy Nasdaq was up 1.3 percent, or 23 points.
Stocks of companies in information technology and telecommunication sectors of the S&P 500 were flat, while shares of companies in the utilities, energy and financial sectors soared.
Stocks were poised to rally this morning on encouraging details released yesterday by the government's stress tests for 19 of the largest banks. The report showed that government aid to some of the biggest banks might be coming to an end soon and that other banks in need of capital would not have to raise as much as some investors had initially feared.
"Stress tests are over with and better-than-expected unemployment data is keeping the parade of slightly-less-bad economic data intact," Todd Clark, director of trading at Nollenberger Capital Partners, said. "The fact that a lot of banks have come to market and raised the capital they need to raise suggests that the worst might be behind financials, and they are trading that way."
The unemployment report by the Labor Department helped to further boost investor confidence. The report showed employers cut 539,000 jobs last month, the fewest in six months.
Despite the moderating job losses, the unemployment rate hit 8.9 percent in April from 8.5 percent in March as companies were wary of hiring amidst the volatile economy. That was a rate not seen since the early 1980s.
Overseas markets were up. London's FTSE was up 1.4 percent, or 63 points, while Germany's DAX was up 2.3 percent, or 110 points. Japan's Nikkei was up 0.5 percent, or 47 points.