Friday's Stock Market Close: US Shares End Week On Positive Note, Buoyed By Unemployment Figures

U.S. stocks rallied Friday, recouping more than half of losses incurred earlier this week, as the Labor Department reported unemployment ticking down and workforce participation remaining steady.

After beginning the week at 26,897, losing more than 800 points Tuesday and Wednesday and picking up more than 120 points Thursday, the Dow Jones Industrial Average closed the week at 26,571, adding nearly 370 points or 1.41%. The S&P 500 finished at 2,951, adding 41 points or 1.41% while the Nasdaq Composite closed at 7,982, up 110 points or 1.4%.

Volume on the New York Stock Exchange totaled 2.3 billion shares with 2,102 issues advancing and 838 declining. Six-seven stocks hit new highs and 32 dropped to new lows.

Leading the most actives were Itau Univbanco Holding (ITUB), General Electric (GE), and HP (HPQ), which dropped nearly 10% on word it planned to cut as many as 9,000 employees.

The Bureau of Labor Statistics reported the September unemployment rate declined to 3.5%, its lowest level since December 1969, and employers added 136,000 jobs, in line with Thursday’s 135,000-job estimate by ADP. The unemployment rate was 0.2% lower than August’s rate, and the number of jobs created in July and August was revised upward by 45,000.

Reports earlier this week from the Institute for Supply Management on both the manufacturing and services sectors indicated the economy is slowing, sparking hopes among traders for a quarter-point drop in interest rates at the U.S. Federal Reserve’s next Open Markets Committee meeting Oct. 29-30.

Grant Thornton labor economist Diane Swonk, however, said though job growth has slowed significantly since last year and wage growth is the weakest it has been in a year, that alone is not enough to trigger an interest rate cut.

“The next data to focus on is inflation,” she said, saying the trade war with China also will be a key element.

Aldis Birkans, chief financial officer of National Bank Holdings, said cutting rates may actually slow the economy further by making banks reluctant to lend money at a rate that cuts into profits.

“By cutting rates, the Fed is also directly cutting the profitability of the vast majority of U.S. banks just when monetary conditions had returned to more normal levels following the 2007-08 financial crisis,” Birkans said in an opinion piece published by MarketWatch. He noted the cost of borrowing is not a major concern for most businesses. The overriding concern is over tariffs on Chinese goods.

The economic expansion currently is in its 11th year and Fed Vice Chairman Richard Clarida said Thursday the central bank will to what it can to keep it going.

Fed Chairman Jerome Powell told a Fed Listens event Friday the economy is in a “good place.”

“Our job is to keep it there as long as possible. While we believe our strategy and tools have been and remain effective, the U.S. economy, like other advanced economies around the world, is facing some longer-term challenges—from low growth, low inflation, and low interest rates,” Powell said, indicating another interest rate cut may not be in the offing after all.

Global markets were mostly higher.

Hong Kong’s Hang Seng closed 1.11% lower and China’s Shanghai Composite was down 0.92% while Japan’s Nikkei 225 rose 0.32%. Australia’s S&P/ASX was up 0.37%.

London’s FTSE c;psed 1.1% higher while the German DAX rose 0.73% and the French CAC was up 0.91%.

The British pound was up 0.08% at $1.2339 while the euro ticked up 0.17% to $1.0983. The dollar index was off 0.04%.

Oil futures were higher. Crude oil added 43 cents to $52.88 a barrel. Brent crude traded at $58.42 a barrel, up 5 cents. Gold futures fell $3.50 to $1,510.30 an ounce while silver dropped 9 cents to $17.585 an ounce.

Yield on the 10-year Treasury note fell to 1.1517%, down 0.021% while the 30-year not fell to 2.011%, off 0.025%.