NEW YORK >> A shakeup of President Bush's economic team heartened investors today, sending stocks higher despite a discouraging employment report. Still, blue chip stocks ended an eight-week winning streak.
By Hope Yen
The Dow Jones industrials fell as much as 121 points early today before rebounding on news that Treasury Secretary Paul O'Neill and White House adviser Larry Lindsey had resigned. Analysts said the news offered hope of a fresh approach to bolstering the economy.
"The market doesn't like O'Neill," said Scott Wren, equity strategist for A.G. Edwards & Sons. Investors are hoping to see a replacement "who's going to be more in tune with the global economy in terms of what makes it tick."
Advancing issues outnumbered decliners 5 to 4 on the New York Stock Exchange. Volume was light.
The Dow climbed 22.49, or 0.3 percent, to close at 8,645.77 following a five-day loss of 308 points.
The broader market also finished higher. The Standard & Poor's 500 index rose 5.68, or 0.6 percent, to 912.23, while the Nasdaq composite index gained 11.69, or 0.8 percent, to close at 1,422.44. The Russell 2000 index rose 2.27 to 396.72.
For the week, the Dow fell 2.8 percent, to snap its eight-week winning streak. The Nasdaq dropped 3.8 percent and the S&P 500 lost 2.6 percent, ending three straight weeks of gains.
The price of the Treasury's 10-year note was up 11/32 point, while its yield fell to 4.09 percent from 4.13 percent yesterday. Two-year Treasury notes were up 3/16 point and yielded 1.87 percent, down from 1.98 percent yesterday.
The Labor Department reported today the nation's unemployment rate unexpectedly rose to 6.0 percent in November, matching an eight-year high set in April. The number offered a bleaker snapshot of the U.S. economy -- analysts had forecast a slight increase from the 5.7 percent in October.
"The report shows that while the unemployment rate stays at historically low levels, weak job growth confirms a modest recovery is under way," said Ed Peters, chief investment officer at PanAgora Asset Management in Boston.
Still, he said the news is not as bad as it seems, and predicts continued consumer spending. "The recovery remains a buyers market, and Americans are still strong consumers," Peters said.
IBM dropped 74 cents to $82.32 after announcing it would buy Rational Software for $2.1 billion in cash. Salomon Smith Barney downgraded IBM to "in-line" from "outperform," citing the high price of its stock. Rational rose $2.12 to $10.29.
Overseas, Japan's Nikkei stock average finished 0.6 percent lower. In Europe, France's CAC-40 rose 0.9 percent, while Britain's FTSE 100 dropped 0.5 percent and Germany's DAX fell 0.5 percent.