updated 9/5/2006 7:14:06 AM ET 2006-09-05T11:14:06

Wall Street ended an erratic week with a big advance Friday after the Labor Department said employers added 128,000 jobs in August , signaling that an economic slowdown might not be as severe as some have predicted. The major indexes ended the week with gains.

Major Market Indices

The report bolstered the view of some on Wall Street that the Federal Reserve might leave rates unchanged when it meets Sept. 20. The Fed didn’t touch rates at its Aug. 8 meeting, interrupting a string of 17 straight increases since 2004. Some investors, who have been concerned that the economy will slow too quickly, regard prospects of further rate increases warily.

The added jobs, slightly more than the 125,000 economists expected, brought down the country’s unemployment rate to 4.7 percent from a five-month high of 4.8 percent in July. During the past 12 months, wages grew by a strong 3.9 percent, the Labor Department said. The last time the figure was higher was in June 2001.

The Dow Jones industrial average finished the day up 83.00 points, or 0.73 percent, while the broader Standard & Poor’s 500-stock index gained 7.19 points, or 0.55 percent, and the Nasdaq composite index advanced 9.41 points, or 0.43 percent.

The major indexes, which fluctuated intra-day throughout the week as investors tussled with economic concerns, managed to end the week higher. The Dow rose 0.73 percent, while the S&P added 0.67 percent and the Nasdaq gained 1.35 percent.

Bonds were little changed, with the yield on the benchmark 10-year Treasury note closing flat at 4.73 percent from late Thursday. The dollar was mixed against other major currencies, while gold prices fell.

Oil prices, which retreated earlier in the week after Tropical Storm Ernesto moved away from oil equipment in the Gulf coast, again slipped below $70 a barrel, in part as a U.N. deadline regarding Iran’s nuclear ambitions expired without immediate consequence.

Wall Street had been awaiting the non-farm payroll report in a week of light but uneven trading ahead of the long Labor Day weekend. Investors are keeping tabs on the unemployment rate both as an indicator of how quickly the economy might be slowing and out of concerns over wage inflation.

Jerry Webman, chief economist at OppenheimerFunds, contends the absence of any major surprises in the unemployment report is good news. “What the stock market doesn’t need over the next few months is more volatility.” He cautioned, though, that the market’s reaction suggests it is anticipating further uneven trading amid continued concerns about energy prices, a cooling housing market and unemployment.

“I think they were just what the Fed was looking for,” Jeffrey Kleintop, chief investment strategist for PNC’s wealth management department, said of the employment figures. “Today’s data moved the markets from thinking the Fed’s done to predicting a rate cut by the middle of next year,” he said, citing a drop in fed funds contracts for next July.

In corporate news Friday, General Motors Corp. posted a 3.9 percent increase in U.S. light vehicle sales last month and trimmed its fourth-quarter production forecast by 12 percent, a move that was expected. The world’s largest automaker was up $1.06, or 3.63 percent, to $30.24.

Bristol-Myers Squibb rose after a judge issued an injunction on sales of a generic form of the drug maker’s blood-thinning drug, Plavix , citing possible patent infringement. Bristol-Myers, which makes the drug with France’s Sanofi-Aventis SA, gained $1.21, or 5.56 percent, to $22.96.

Intergraph Corp., a maker of mapping software, surged $6.49, or 17 percent, to $43.85 after it agreed to be taken private in a $1.3 billion buyout deal.

Aerospace company Lockheed Martin Corp. rose after confirming it received a multibillion-dollar NASA contract for construction of a spacecraft capable of sending astronauts to the moon and perhaps to Mars. Lockheed rose $1.21 to $83.81.

Intel Corp. also moved higher amid reports that it would slash up to 20,000 jobs next week. The cuts were largely expected, and the stock rose 31 cents to $19.88.

Overseas, Japan’s Nikkei stock closed down 0.04 percent. At the close, Britain’s FTSE 100 rose 0.73 percent, Germany’s DAX index was up 0.39 percent and France’s CAC-40 gained 0.36 percent.

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