Stocks Soar To Record High
A government labor report sparked a U.S. stock market rally Friday as the Dow Jones industrial average jumped 269 points to close at a record high of 9,736.08, according to unofficial results.
It was the first time the Dow closed above the 9,700 mark. The previous record close was 9,643.32 on Jan. 8.
The report showed the U.S. labor market was strong in February, but not strong enough to force the Federal Reserve to raise interest rates when it meets at the end of the month.
The U.S. economy added 275,000 nonfarm payroll jobs in February, exceeding the forecast of 253,000, but the unemployment rate rose a notch to 4.4 percent and average hourly earnings barely budged, the Labor Department reported Friday.
January's payroll gains were revised down by 28,000 to 217,000, while December's gains were revised higher by 16,000 to 314,000.
In all, the report was much friendlier than the doomsday scenarios painted by nervous bond traders in the past week.
The brightest news (for the markets) came on inflation. Average hourly earnings rose just 1 cent or 0.1 percent to $13.04 in February, bringing the increase over the past year to 3.6 percent. Federal Reserve Chairman Alan Greenspan warned last week in his Humphrey-Hawkins testimony that tight labor markets would eventually force employers to raise wages to attract good workers. That clearly hasn't happened yet.
Greenspan said the economy is less-inflation prone now than in the past. The Fed feels comfortable waiting awhile to battle inflation, he said.
Payroll gains in February came largely from construction and retail trade. The housing boom and unusually mild weather added 72,000 construction jobs while 123,000 jobs were added in the retail sector, the most since February 1988. The government said the outsized increase was largely due to large department stores keeping employees instead of laying them off.
Manufacturing lost 50,000 jobs, bringing the loss over the past 12 months to 330,000. The big losses came in apparel, autos, aircraft, fabricated metals, and industrial machinery.
Mining industries lost another 10,000. Nearly 9 percent of all mining jobs have been lost in the past 12 months as low commodity prices take their toll.
Written By Rex Nutting, Washington bureau chief for CBS MarketWatch