NEW YORK -- U.S. stocks rallied yesterday after a Labor Department report showed a surprisingly large jump in employment.
The Standard & Poor's 500 index set a record for the first time in almost two months, climbing 10.69 to 983.79, its first record since Oct. 7. Oil industry shares such as Exxon Corp. and Rowan Cos., which do best when the economy is expanding, led the gains.
The Dow Jones industrial average rose 98.97 to 8,149.13. The Dow gained 326 points this week, its best weekly performance since mid-June, and is 110 points from its record high.
Nasdaq's composite index rose 20.48 to 1,633.90.
Among other broad market indexes, the Russell 2,000 index of small capitalization stocks added 3.15 to 438.06; the Wilshire 5,000 index, comprising stocks on the New York, American and Nasdaq stock exchanges, finished unchanged at 9,317.17; the American Stock Exchange composite index added 4.47 to 670.27; and the S&P; 400 midcap index gained 4.16 to 333.89.
The yield on the benchmark 30-year Treasury rose 3 basis points to 6.08 percent.
The S&P; 500 is up 33 percent this year, after gaining 20 percent in 1996 and 34 percent in 1995.
Stocks initially fell with bonds after the jobs report. Investors, traders and analysts soon concluded that Asia's slowdown will offset the increasing demand for goods, services and workers in the United States, and that inflation will remain tame.
Low inflation and low interest rates keep borrowing costs to a minimum, helping the economy grow.
The jobs report was "a nonevent," said Bill Meehan, chief market strategist at Cantor Fitzgerald & Co. "There are too many disinflationary forces outside the domestic economy to have the Federal Reserve tighten in the near term."
Supporting that view, a senior Fed official said in an interview before the jobs report that the central bank expects the U.S. economy to slow to a "reasonable" growth rate next year, with continued low inflation. The comments signaled that the U.S. central bank won't increase the benchmark overnight bank loan rate anytime soon.
Hambrecht & Quist Group fell $1.50 to $43.50, after people familiar with the matter said Merrill Lynch & Co. is negotiating to buy the San Francisco-based investment bank. H&Q;, up $3.50 to $45 yesterday, has almost doubled in 1997. The Wall Street Journal said Merrill Lynch was in talks to buy the firm for more than $1 billion, although one of the people familiar with the talks suggested that may be too high.
Ascend Communications Inc. rose $2.0625 to $28.9375 amid speculation that it received a takeover offer. The decline also followed its forecast that fourth-quarter earnings will meet estimates. Some 30 million Ascend shares changed hands, making it the most actively traded stock in U.S. markets.
Eastman Kodak Co. fell 62.5 cents to $58.875 after the photography company lost its bid before the World Trade Organization to force the Japanese government to reduce Fuji Photo Film Co.'s dominance of the Japanese film market.
Dave & Buster's Inc., which runs restaurant/entertainment complexes, lost $3.375 to $23.625 after the company reported disappointing earnings.
Pub Date: 12/06/97