Stocks head for big weekly gain after jobs report

Stocks head for big weekly gain after jobs report

January 4th, 2013 by Associated Press in Local - Breaking News

Stock market tile

Stock market tile

Photo by Associated Press /Times Free Press.

NEW YORK - Stocks edged higher after a report showed that hiring held up in December, keeping the Dow on track for its best week in more than six months.

The Dow Jones industrial average was up 16 points to 13,407 as of 1:22 p.m. EST Friday. It's up 3.6 percent for the week, putting it on track for its biggest weekly advance since June. The Standard & Poor's 500 index rose four points to 1,464 and is up 4.4 percent in the week, its biggest gain in more than a year. The Nasdaq was up less than a point at 3,101.

Stocks have surged this week after lawmakers passed a bill to avoid a combination of government spending cuts and tax increases that have come to be known as the "fiscal cliff." The law passed late Tuesday night averted that outcome, which could have pushed the economy back into recession.

The Labor Department said U.S. employers added 155,000 jobs in December, showing that hiring held up during the tense fiscal negotiations in Washington. It also said hiring was stronger in November than first thought. The unemployment rate held steady at 7.8 percent.

The jobs report failed to give stocks more of a boost because the number of jobs was exactly in line with analysts' forecasts, said JJ Kinahan, chief derivatives trader for TD Ameritrade.

"The jobs report couldn't have been more in line," said Kinahan. "The market had more to lose than to gain from it."

Among stocks making big moves, Eli Lilly and Co. jumped $1.87 to $51.59 after saying that its earnings will grow more than Wall Street expects, even though the drugmaker will lose U.S. patent protection for two more product types this year.

Walgreen Co., the nation's largest drugstore chain, fell 30 cents to $37.49 after the company said that a measure of revenue fell more than analysts had expected in December, even as prescription counts continued to recover.

Stocks may also be benefiting as investors adjust their portfolios to favor stocks over bonds, said TD Ameritrade's Kinahan. A multi-year rally in bonds has pushed up prices for the securities and reduced the yield that they offer, in many cases to levels below company dividends.

Goldman Sachs today reiterated its view that stocks "can be an attractive source of income," and warned that there is a risk that bonds may fall. In a note to clients, the investment bank said that an index of AAA rated corporate bonds offers a yield of 1.6 percent, that's less than the S&P 500's dividend yield of 2.2 percent.

The 10-year Treasury note fell, pushing its yield higher. The yield on the 10-year note rose 2 basis points to 1.93 percent. The note's yield has now climbed 54 basis points since falling to its lowest in at least 20 years in July.

Other notable stock moves;

- Accuray Inc. plunged $1.36 to $5.42 after the radiation oncology equipment company reported weak sales and said it would cut 13 percent of its staff.

- Lululemon, a yoga apparel maker, dropped $3.64 to $71.45 after Credit Suisse predicted slowing momentum and downgraded its stock.

- Finish Line, an athletic footwear and clothing company, fell $1.12 to $17.92 after it reported a small loss after sneaker trends changed and customers didn't take to its new web site launched in November. Analysts had forecast a profit.