Utilities give Wall Street a boost
NEW YORK - Stocks rose on Friday for the first day this week, led higher by dividend-rich utility and phone companies.
Investors bought up the stocks after the government reported that U.S. employers added fewer jobs than forecast for August. That boosted demand for bonds and pushed down their yields. In turn, stocks with big dividends became more attractive.
Gap fell the most in the Standard & Poor's 500 index after the retailer reported weak August sales at its eponymous clothes stores.
The S&P 500 index rose four points to 2,002 as of 1:52 p.m. ET. The record close for the index is 2,003.37, set Aug. 29. The Dow Jones industrial average gained 32 points to 17,102. The Nasdaq composite gained five points to 4,567.
U.S. employers added 142,000 jobs in August, snapping a six-month streak of hiring above 200,000 and posting the smallest gain in eight months, the Labor Department saidFriday. The unemployment rate fell to 6.1 percent from 6.2 percent, falling because more people without jobs stopped looking for one and were no longer counted as unemployed. Economists had expected employers to add 220,000 jobs.
Some investors pointed out that Friday's news was at odds with reports earlier this week that showed the economy is still strengthening. Construction and the service industry, for example, were strong.
"The preponderance of evidence is that things continue to expand," said John Fox, director of research, Fenimore Asset Management. "This is a blip."
Bond prices rose on the hiring news. The yield on the 10-year Treasury note, which moves in the opposite direction of price, dropped to 2.43 percent from 2.45 percent late Thursday
Investors focused on utility and phone company stocks, which led Friday's gains. They also bought Treasury notes, which pulled down bond yields, after the disappointed jobs report. Dividend-rich utility stocks are the second-best performing industry sector in the S&P 500 index this year, climbing almost 14 percent.
Gap dropped $2.22, or 4.8 percent, to $44.35 after reporting that a key sales measurement slumped in August. Sales at stores open at least one year fell 2 percent over the four weeks that ended Aug. 30. Revenue from Gap stores open during that time fell 6 percent. That will put pressure the brand's profit margins in September.
Another retailer also got hit. Michael Kors fell $3.13, or 3.9 percent, to $76.84 after one of its principal founding stockholders said it was selling its remaining shares in the luxury retailer. Sportswear Holdings had a 5.7 percent stake in the company.
Major stock indexes in Europe were mixed. Britain's FTSE 100 index was down 0.5 percent while France's CAC 40 fell 0.1 percent. Germany's DAX was 0.3 percent higher.
The euro rebounded from a slump on Thursday, when the European Central Bank surprised markets by cutting interest rates and announcing a new stimulus program. Europe's single currency rose 0.1 percent to $1.2950 Friday. The dollar was at 105.22 yen after rising as high as 105.71 yen, the highest level since October 2008.
The price of oil fell further after slumping Thursday, when a report showed that U.S. crude supplies fell less than expected. Benchmark crude oil was down 89 cents to $93.55 a barrel in New York after falling $1.09 on Thursday.