U.S. stocks advance amid stimulus bets after employment report

U.S. stocks rose, with the Standard & Poor’s 500 Index poised for its biggest weekly gain since June, amid bets on central bank stimulus as American payrolls increased less than projected.

Commodity and financial shares climbed the most among 10 S&P 500 groups as Bank of America Corp. and Cliffs Natural Resources Inc. jumped at least 4.7 percent. Caterpillar Inc. and Alpha Natural Resources Inc. rallied more than 3.7 percent as China announced infrastructure projects. Intel Corp. and Kraft Foods Inc. fell more than 3.6 percent amid disappointing forecasts, dragging the Dow Jones Industrial Average lower.

The S&P 500 rose 0.3 percent to 1,436.59 at 2:35 p.m. in New York, after reaching the highest level since 2008 yesterday. The index is up 2.1 percent in a holiday-shortened week. The Dow lost 5.83 points, or less than 0.1 percent, to 13,286.17 today. Trading in S&P 500 companies was up 27 percent from the 30-day average at this time of day.

“The market is taking this weak jobs number as a positive because it means that we’re going to get action coming from Bernanke and company,” said Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust in Boston. He spoke in a telephone interview. “It’s just this new upside-down world of investing that we’re living in where bad news is good news for assets.”

Equities rose as Labor Department figures showed the economy added 96,000 workers last month following a revised 141,000 rise in July that was smaller than initially estimated. The median estimate of 92 economists surveyed by Bloomberg called for a gain of 130,000. Unemployment unexpectedly fell to 8.1 percent, and hourly earnings were unchanged.

Economic Slowdown

Employers may be reluctant to expand headcounts as they face a global economic slowdown and the so-called fiscal cliff of automatic tax increases and government spending cuts. The damage inflicted by the lack of progress on jobs is the reason Federal Reserve Chairman Ben S. Bernanke last week said the central bank may need to do more. The Federal Reserve’s Open Market Committee meets next week to discuss policy and will release a statement on Sept. 13 after a two-day meeting.

The S&P 500 climbed 2 percent yesterday as the European Central Bank announced specifics of its bond-buying plan and data boosted optimism in the American economy. The index has risen 14 percent this year as European leaders worked to tame the region’s debt crisis and the Fed vowed to safeguard the economic recovery.

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