Star-Bulletin news services
Dow, Nasdaq rise
on job-gain newsThe manufacturing sector
has created jobs, a missing
piece of economic recovery
NEW YORK >> The Dow Jones industrial average and Nasdaq composite index posted their strongest gains since early February yesterday on news that the improving manufacturing sector has managed to create jobs -- a key piece of the economic recovery that, to date, has been lacking.
Manufacturing further expanded in February, although at a slightly slower pace than expected, according to the Institute for Supply Management. Analysts said the sector was consolidating its gains and preparing for stronger growth.
Although the ISM's main business index fell to 61.4 in February compared with a revised 63.6 in January, analysts noted that the group's subindex for employment was surprisingly higher.
"This helps support the feeling that the employment picture is improving," said Peter Dunay, chief market strategist at Wall Street Access. "Everything we've been seeing is that employment is getting better, but it's not where everyone wants it to be."
The Dow jumped 94.22, or 0.9 percent, to 10,678.14, its biggest one-day point gain since Feb. 11. The technology-focused Nasdaq rose 27.98, or 1.4 percent, to 2,057.80, posting its biggest gains since Feb. 6 despite concerns about the strength of semiconductor stocks.
The Standard & Poor's 500 index was up 11.02, or 1 percent, at 1,155.96, posting its biggest one-day gain since Feb. 17.
The price of the Treasury's 10-year note closed down18 point, while its yield rose to 3.99 percent from 3.97 percent Friday. Two-year Treasury notes were down 1/32 point and yielded 1.60 percent, up from 1.65 percent late Friday.
Another indicator of employment growth will come Friday as the government issues its report on job creation during February. Andrew Valerie, senior vice president and equity strategist at LPL Financial Services, said that number will come under close scrutiny.
"The data has to find a really fine line of not being overly strong over overly weak," Valerie said. "Too low, you get worries about the lack of jobs. Too high, you start wondering about interest rate hikes."
Before the session began, the Commerce Department reported consumer spending rose 0.4 percent in January, in line with economists' expectations and just slightly lower than the strong 0.5 percent rise from December. After-tax incomes rose 0.8 percent in January, up from 0.3 percent the month before.
While spending remained healthy, consumer incomes grew by only 0.2 percent in January, compared with 0.4 percent for December. The income reading fell short of the forecast by Wall Street, but the spending number appeared to hold more weight with investors.
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