A late rally gave Wall Street a modest advance Friday, driving the market’s main stock indexes higher for the week, after a lackluster employment report left investors wondering about the pace of economic growth and inflation.
While October’s job creation figures fell short of expectations, it signaled the economy is weathering the blows dealt by hurricanes Katrina and Rita. The Labor Department said U.S. employers added 56,000 jobs last month, half the 100,000 increase projected by economists.
Investors also focused on September’s job loss, which was scaled back 27,000 jobs to just 8,000, suggesting the hurricanes’ impact was less than feared. But a downward revision to August’s figure indicated the job market may have been weaker than previously thought before the hurricanes struck, said Christopher Piros, director of investment strategy for Prudential’s Strategic Investment Research Group.
Piros also said that while payrolls have expanded by 48,000 from August to October, the growth came from a 52,000 rise in temporary employment and a 45,000 gain in construction jobs.
“Meanwhile, the rest of the economy has lost 49,000 jobs,” Piros said. “That’s not exactly a picture of strength.”
Inflation worries were renewed when the Labor Department also reported average hourly earnings grew 0.5 percent last month, ahead of estimates for a 0.2 percent gain. Higher wages benefit workers but could lead to increased prices as costs rise.
Even with a dearth of upbeat economic data over the past two weeks, the market continues to wander aimlessly with little concrete information to rely on, said Brian Gendreau, investment strategist for ING Investment Management. As an example, he pointed to the wide range of forecasts for last month’s payrolls — a loss of 25,000 jobs to a 300,000 gain.
“I think people are just doing the best they can. They’re looking at the numbers and trying to parse out as much as humanly possible,” said Gendreau, who estimates the hurricanes will reduce fourth-quarter economic activity by as much as 0.5 percent. “I do know the hurricane effect will drop out of the numbers in a month or two, and that will be positive.”
The Dow Jones industrial average was up 8.17 points, or 0.1 percent, at the close, while the broader Standard & Poor’s 500-stock index added a fraction of a point, or 0.02 percent. The Nasdaq composite index, full of technology stocks, gained 9.21 points, or 0.4 percent.
Nonetheless, stocks finished the week with sturdy gains, as the third-quarter earnings season wound down and with few major economic reports expected next week. For the week, the Dow rose 1.2 percent, the S&P 500 climbed 1.8 percent and the Nasdaq jumped 3.8 percent.
Cooling oil prices offered some relief Friday after expectations for greater demand this winter drove up prices more than $2 a barrel the prior session. A barrel of light crude dropped $1.20 to $60.58 on the New York Mercantile Exchange.
Software maker Oracle Corp. said late Thursday that co-President and Chief Financial Officer Greg Maffei is leaving next week after just four months on the job, sparking concerns about the company’s hiring practices. Oracle nonetheless added 41 cents to $12.61.
Shares of Apple Computer Inc. dipped after Prudential Equity lowered the company one notch to “neutral,” saying the stock is fairly valued after reaching a recent 52-week high on expectations for strong 2006 results. Apple lost 70 cents to $61.15.
Investors pulled back from Merck & Co. a day after news of the drugmaker’s victory in the latest trial over its Vioxx painkiller lifted shares almost 4 percent. The company still plans to fight the 7,000 cases that have been filed. Merck fell 26 cents to $29.22.
In earnings news, newspaper publisher Washington Post Co. reported a 19 percent drop in quarterly profit, hurt by hurricane-related costs and lower revenue in its television and magazine divisions. Washington Post slumped $10.64 to $759.36.
Expedia Inc. surged $2.02 to $22.73 after the online travel agent said Thursday its earnings climbed 41 percent to soundly beat Wall Street targets, helped by stronger revenue and bookings.
Overseas, Japan’s Nikkei stock average jumped 1.3 percent. In Europe, Britain’s FTSE 100 fell 0.15 percent, Germany’s DAX index lost 0.31 percent and France’s CAC-40 was lower by 0.07 percent.