U.S. nonfarm payrolls fell by a far smaller than expected 11,000 in November, suggesting a strengthening economic recovery
By Mary Childs
Dec. 4 (Bloomberg) -- U.S. stocks gained, extending a weekly advance, after the unemployment rate unexpectedly declined and Treasury Secretary Timothy Geithner said the job market may improve further as economic growth strengthens.
Bank of America Corp. (BAC) added 2.8 percent and Monster Worldwide Inc. (MWW), the largest online-recruiting company, surged 12 percent after employers in the U.S. cut the fewest jobs in November since the recession began and the jobless rate fell to 10 percent. The Labor Department report drove the Dollar Index higher and sent gold to the steepest decline in a year, spurring losses for shares of commodity producers such as Freeport- McMoRan Copper & Gold Inc. (FCX) that limited the market's advance.
The Standard & Poor's 500 Index added 0.6 percent to 1,105.98 at 4 p.m. in New York. The Dow Jones Industrial Average rose 22.75 points, or 0.2 percent, to 10,388.90. Gold tumbled 4 percent to $1,169.50 an ounce for the steepest loss in a year.
"We lost a lot less than we thought we would, and the best that we've seen in many moons," Burt White, who oversees $269 billion as chief investment officer at Boston-based LPL Financial, said of the jobs report. "If anything holds this thing back, it's that concern over the brake. What's the Fed going to do with this in their back pocket?"
The S&P 500 swung between gains and losses at least 20 times, according to data compiled by Bloomberg, as investors weighed concern the Federal Reserve will boost interest rates to curb speculation. Chairman Ben S. Bernanke said yesterday he doesn't rule out using monetary policy to pop asset bubbles after officials in emerging markets suggested the Fed's record- low rate target is pushing prices in their region too high.
Fed Funds Futures
The Dollar Index, a gauge of the currency against six major trading partners, jumped 1.6 percent. Odds that the Federal Reserve will boost interest rates by its June meeting rose to 55 percent from 43 percent yesterday, according to Fed funds futures trading. The S&P 500 erased its gain earlier on concern that borrowing costs will rise.
The Labor Department said the U.S. lost 11,000 jobs last month, the fewest since the recession began and less than one- tenth the 125,000 median estimate in a survey of economists. The improving labor market indicates the deepest U.S. recession since the 1930s may have ended, though it is too soon to say precisely what month it stopped, said the head of the group charged with making the call.
'Trough in Employment'
"Today's report makes it seem that the trough in employment will be around this month," said Robert Hall, who heads the National Bureau of Economic Research's Business Cycle Dating Committee. "The trough in output was probably some time in the summer. The committee will need to balance the midyear date for output against the end-of-year date for employment."
Bank of America gained 2.8 percent to $16.20, rebounding from a 0.9 percent retreat. The nation's biggest lender sold raised $19.3 billion selling securities for $15 each in the biggest sale of stock or preferred shares by a U.S. public company since at least 2000. The security is made up of one depositary share and one warrant and is convertible into one common share, subject to stockholder approval.
Financial companies rose the most among 10 industries in the S&P 500, gaining 1.7 percent as a group. Moody's Corp. (MCO) gained 7.7 percent to $25.36 for the biggest rally since Sept. 29. The company, whose founder John Moody created credit ratings in 1909, was rated "buy" in new coverage at Bank of America, which cited the outlook for growth in credit markets.
Staffing companies advanced following the government's employment report. Monster Worldwide surged 12 percent, the most since Aug. 7, to $16.83. Robert Half International Inc. (RHI) jumped 11 percent to $25.74.
Gold's plunge drove down shares of raw-materials producers. The metal is rising for the ninth straight year. Freeport- McMoRan lost 4.7 percent to $79.87 in its biggest retreat since Oct. 30. Newmont Mining Corp. (NEM) fell 4.5 percent to $52.05.
AK Steel Holding Corp. (AKS) fell 3.8 percent to $19.38. The steelmaker was downgraded to "hold" from "buy" at Citigroup Inc., which said the stock is more expensive than its peers.
DuPont Co. (DD) also helped send the S&P 500 Materials Index to a 1.2 percent drop. The world's second-biggest seed producer will delay new herbicide-resistant corn and soybean seeds by at least two years, helping Monsanto Co. maintain its lead position in seed biotechnology.
Big Lots Inc. (BIG), a closeout retailer, and Marvell Technology Group Ltd. (MRVL), a maker of chips for computers and mobile phones, gained after reporting third-quarter earnings that beat estimates. Big Lots jumped 19 percent to $28.08 for the biggest gain in the S&P 500. Marvell added 9.3 percent to $18.06.
Geithner said the economy is "gradually growing" and that chances are high the unemployment rate will decline next year. He spoke in an interview for Bloomberg Television's "Political Capital With Al Hunt," airing this weekend.
"The key test is when you see companies across the country starting to create jobs and add to payrolls. We're getting closer to that point -- that's the important thing," he said. "You see pockets of real strength now in technology and exports and I think they are hopeful signs of progress."
To contact the reporter on this story: Mary Childs in New York at email@example.com