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Jobless report
lifts Dow 202 points

The Nasdaq gains 160 to another
record after the unemployment
rate edges up to 4.1%

Associated Press

NEW YORK -- Stocks bounded higher today, giving Dow industrials their best week since last July, after the government's latest employment report showed some easing of the tight labor market.

Analysts said investors interpreted the report as a sign that the Federal Reserve's four rate increases since last June may finally be slowing the economy just enough to prevent inflation.

The Dow Jones industrial average rose 202.28, or 2 percent, to close at 10,367.20. For the week, the blue-chip index rose 505.08 points, its best performance since the week ended July 2, 1999, when it rose 586.68.

The Nasdaq composite index, meanwhile, crossed 4,900 for the first time and closed at a new record. The index rose 160.27, or 3.37 percent, to 4,914.78, well above its previous closing record of 4,784.08, set Wednesday.

Broader stock indicators also were higher.

Stocks shot higher after the Labor Department reported 43,000 new jobs were created in February, well below analysts' expectations and the weakest since May.

Average hourly earnings, a key gauge of inflation pressures, rose by 0.3 percent to $13.53 in February -- on target with most analysts' expectations. And the nation's unemployment ticked up to 4.1 percent in February from 4 percent in January, but it still remained near a 30-year low.

The fast-growing labor market has spooked Wall Street for months, with many investors worrying about how continued growth will affect businesses. Companies must offer competitive wages and incentives to keep employees while the U.S. jobless rate lingers at such low levels.

"The big concern is that the economy was going to overheat and employment was going to be one of the biggest problems," said Alfred E. Goldman, director of market analysis at A.G. Edwards & Sons Inc. in St. Louis. "But we did not create nearly the number of jobs that were expected and the unemployment rate went up. That's good news."

The Fed has raised interest rate four times since June in an effort to slow the economy and control inflation. The jobs report today and data released Thursday showing new-home sales plunged by 4.2 percent in January may be signaling that the Fed's actions are having some effect. While most investors still believe that the Fed will likely boost rates again soon -- maybe even at their meeting later this month -- many now think that the hike won't be as sharp as previously thought.

"The softer the economic numbers we see, the more lenient the Fed will be," said Larry Wachtel, market analyst at Prudential Securities. "Right now bad news is good news for this market."

The Standard & Poor's 500 rose 27.41 to 1,409.17. Advancing issues beat decliners by a 4-to-3 margin on the New York Stock Exchange, with 1,716 up, 1,246 down and 524 unchanged. NYSE volume totaled 1.151 billion shares as of 4 p.m., vs. 1.188 billion yesterday.

The NYSE composite rose 8.97 to 610.47; the Russell 2000 index of smaller companies rose 13.84 to 597.88, a new record; and the American Stock Exchange composite rose 10.21 to 1,013.71.

Among industrial stocks in the Dow, DuPont and 3M rose. Bill Painter, a trader at Federated Investors of Pittsburgh, said portfolio managers were avidly buying shares of companies that have been pounded down by investors' worries over interest rates.