Stocks finish higher ahead of jobs report

NEW YORK » Wall Street finished a quiet session modestly higher yesterday as Wall Street awaited the government's September employment report, hoping it will strike a balance between steady growth and more room for interest rate cuts.

Yesterday's economic data, which showed a gain in jobless claims and a drop in factory orders, gave investors little incentive to make any big moves ahead of the payrolls report.

August's job creation report showed a decline in payrolls when economists had predicted a rise, and sent the Dow Jones industrial average down nearly 250 points the day it was released.

Since then, the Federal Reserve has lowered a key interest rate and the Dow quickly bounced back to where it was in mid-July, before the credit markets tightened up and caused stocks to fall sharply.

Today's report is important because this year's relatively stable job market has been an important prop for the U.S. economy, helping to offset the housing slump and sluggish growth.

"The jobs report can be a real distraction for the market, and with good reason. The number of people working, where they work, how much they get paid, tells us a whole lot about the economy," said Alan Gayle, senior investment strategist at Trusco Capital Management. "In the meantime, the markets are pretty much treading water. A strong report tomorrow will revive notions that the Fed is one and done. If the report continues to be soft, that's going to suggest more easing coming our way."

But while investors are angling for the Fed to lower rates again when it meets Oct. 30-31 -- which would spur spending by making borrowing cheaper -- they don't want the job market too weak.

When people don't have incomes, they tend to trim spending and can become delinquent in their bill payments.

The Dow rose 6.26, or 0.04 percent, to 13,974.31, after shooting to a record high Monday and then giving back a large chunk of its gains Tuesday and Wednesday.

Broader stock indicators were also little changed on the day, which was notable for its low volume and low volatility. The Standard & Poor's 500 index rose 3.25, or 0.21 percent, to 1,542.84, and the Nasdaq composite index advanced 4.14, or 0.15 percent, to 2,733.57.

The Russell 2000 index of smaller companies rose 3.00, or 0.36 percent, to 829.15.

Advancing issues outnumbered decliners by about 5 to 3 on the New York Stock Exchange, where volume came to 1.1 billion shares compared with 1.25 billion shares traded yesterday.

Bonds rose as the markets awaited the employment report. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell to 4.53 percent from 4.55 percent late Wednesday.

The U.S. dollar fell against most major world currencies, pushing gold higher.

Crude oil futures settled higher for the first time in four sessions as investors weighed whether supplies are adequate to meet demand.

Light, sweet crude for November delivery rose $1.50 to settle at $81.44 a barrel on the New York Mercantile Exchange.