U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for the week, as a weaker- than-estimated jobs report eased concern that the Federal Reserve may accelerate the pace of stimulus cuts.
Companies that pay the highest dividends such as utility and phone stocks advanced as bond yields slipped, boosting the allure of equity income. Alcoa Inc. dropped 5.4% after profit missed estimates. Sears Holdings Corp. plunged 14% as it forecast a fourth-quarter loss and said sales during the holiday period dropped. Chevron Corp. slid 1.9% after saying earnings suffered as energy output declined.
The S&P 500 rose 0.2% to 1,842.37 at 4 p.m. in New York, after falling as much as 0.3% earlier in the day. The benchmark index added 0.6 this week, paring its drop in 2014 to 0.3%. The gauge climbed 30% last year, the most since 1997. The Dow Jones Industrial Average dropped 7.71 points, or 0.1%, to 16,437.05. About 6.6 billion shares changed hands on U.S. exchanges, 8.8% above the three- month average.
“This could actually be good news for the market,” Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees more than $1 trillion, said by phone. “If these numbers don’t get revised upward, it will keep the Fed careful about wanting to taper too quickly.”
The 74,000 gain in payrolls, less than the most pessimistic projection in a Bloomberg survey, followed a revised 241,000 advance the prior month, Labor Department figures showed today in Washington. The median forecast of 90 economists called for an increase of 197,000. The unemployment rate dropped to 6.7%, the lowest since October 2008, as more people left the labor force.
The Fed, which next meets Jan. 28-29, in December announced a reduction of $10 billion in its monthly bond-buying program to $75 billion, citing a recovery in the labor market. Three rounds of stimulus from the central bank have helped push the S&P 500 higher by 172% from a 12-year low in 2009.
At the central bank’s December meeting, some members of the Federal Open Market Committee “expressed the view that the criterion of substantial improvement in the outlook for the labor market was likely to be met in the coming year if the economy evolved as expected,” meeting minutes showed Jan. 8.