msnbc.com news services
updated 7/11/2005 7:59:17 AM ET 2005-07-11T11:59:17

A mixed job creation report had enough good news in it to push Wall Street sharply higher Friday, lifting the Dow Jones industrials to a solid triple-digit gain. A drop in crude oil futures added to the rally.

Major Market Indices

European markets surged Friday , one day after a series of deadly terrorist bombings in London slammed the region’s stock markets and dented U.S. stocks. On Wall Street investors welcomed the Labor Department’s jobs report , which showed 146,000 jobs were created in June, less than the 195,000 economists hoped for. But the report also showed the U.S. unemployment rate fell to 5 percent from 5.1 percent in May, and hourly earnings rose 0.2 percent.

Milton Ezrati, senior economic strategist at Lord Abbett & Co., of Jersey City, N.J., said the world remained intact despite another terrorist attack. “This has been a cloud over the market for years and will remain one. But for the time being, there’s a sense of relief that the civilized world has weathered this,” he said.

Even with oil prices remaining close to $60 per barrel , Friday’s June employment news was enough to encourage Wall Street’s two main camps. Those who fear inflation were happy with only a modest rise in job growth and wages, while those worried about a severe slowdown in the economy could point to another sign of steady, if slower, growth.

“I think the shock of $60 oil has worn off and the market is focusing on the jobs report,” said Russ Koesterich, senior portfolio manager at Barclays Global Investments in San Francisco. “It’s also encouraging that you’ve had resiliency in the face of both terrorism and oil prices.”

Wall Street’s major stock indexes extended their Thursday gains Friday, which came despite the wave of London bomb attacks that killed more than 50 people.

The Dow Jones industrial average finished the day up 146.85 points, or 1.4 percent, while the broader Standard & Poor’s 500-stock index rose 13.99 points, or 1.2 percent. The technology-laden Nasdaq composite index jumped 37.22 points, or 1.8 percent, to its second best close of 2005. For the week, all three indices posted sturdy gains.

The bond market’s recent rally was stymied as stocks surged. The dollar made gains against other major currencies, while gold prices fell after climbing Thursday in the wake of the terror attacks.

Oil prices moved lower in afternoon trading after rising past $61 per barrel as Hurricane Dennis threatened oil rigs and refineries in Florida and the Gulf of Mexico.

Analysts were encouraged by the market’s performance over the last two sessions, which helped push the major indexes into positive territory for the week.

“I think, all told, you’re seeing the markets welcome rationality,” said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. “The markets behaved very rationally after the London attacks, and even with oil rising because of hurricane season, the markets are accepting that as just a fact of life. With a backdrop of good economic news here, stocks look attractive.”

Alcoa Inc. kicked off the second quarter earnings season late Thursday, posting a 14 percent rise in profits and beating Wall Street’s earnings forecasts by a penny per share. Alcoa rose $1.11 to $27.20.

Technology consulting firm Accenture Ltd. climbed $2.01 to $24.21 after it reported a strong rise in second-quarter profits. The company surpassed analysts’ expectations by 8 cents per share.

And Siebel Systems Inc., the business software maker, said revenues for the second quarter would be lower than expected due to sluggish sales. Siebel fell 20 cents to $8.59.

Overseas, London’s FTSE 100 surged 1.4 percent, nearly making up all of Thursday’s losses. Other European markets likewise recovered, with Germany’s DAX index rising 1.5 percent and France’s CAC-40 gaining 1.9 percent. Japan’s Nikkei stock average fell 0.2 percent.

The Associated Press and Reuters contributed to this report.

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