Star-Bulletin news services
Stocks rise in advance
of today’s labor report
NEW YORK >> A drop in weekly unemployment claims and rising manufacturing activity helped propel stocks higher yesterday, but many investors remained wary of taking big stakes ahead of the government's monthly labor report.
The Institute for Supply Management found steady improvement in the manufacturing sector in March, raising the prospect of more hiring in the nation's factories.
The ISM report, and another from the Labor Department showing a decline in new claims for unemployment benefits last week, suggest the job market may be improving.
Economists are watching for today's report on the number of new jobs created in March. Most want to see the economy add 200,000 to 300,000 new jobs for several months before they'll declare a recovery, but they've been deeply disappointed so far this year.
"The jobs report is going to be very big," said Michael Palazzi, managing director of equity trading at SG Cowen Securities. "We know how the market will react to a negative number, but it'll be interesting to see how it reacts to a positive number. We just don't know the extent of what we could see."
Opening the month and the quarter on a positive note, the Dow Jones industrial average advanced 15.63, or 0.2 percent, to close at 10,373.33.
The broader gauges were also higher. The Nasdaq composite index added 20.79, or 1 percent, to 2,015.01. The Standard & Poor's 500 index rose 5.96, or 0.5 percent, to 1,132.17.
The price of the Treasury's 10-year note closed down38 point, while its yield rose to 3.88 percent from 3.83 percent Wednesday. Two-year Treasury notes fell332 point and yielded 1.63 percent, up from 1.57 percent Wednesday.
Analysts said the day's upward trend was solidified by the ISM report, which showed sustained momentum in the manufacturing sector, with strong orders and a ramp-up in production.
The manufacturing index registered 62.5 in March compared with a reading of 61.4 in February. Economists expected a figure of 59.5.
"This supply management report, coming above expectations, was really the revitalizing factor that took a lackluster move to a decent move," said Larry Wachtel, market analyst at Wachovia Securities. "The hesitancy you see now is related to the jobs number. Everybody's laying low."
In today's labor report, investors are "looking for a Goldilocks number, not too hot, not too cold," Wachtel said.
A number that's too high might motivate the Federal Reserve to raise interest rates sooner rather than later, Wachtel said, while a number that's too low might be seen as an indictment of the pace of the recovery.
"The bottom line is, if all these things are conjectural, why am I going to take a big position this afternoon?" Wachtel said.
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