Dow tops 11,000 for 1st time since May

By Melinda Peer, TheStreet

 

Updated at 12:41 p.m. ET

 

The Dow Jones Industrial Average topped 11,000 for the first time in five months after a weak jobs report strengthened expectations that the Federal Reserve will take steps to boost the economy.

 

At 12:41 p.m. ET, the Dow Jones Industrial Average ($INDU) was up by 61 points, or 0.6%, at 11,009. The S&P 500 ($INX) was up 6.6 points, or 0.6%, at 1,165. The Nasdaq ($COMPX) was rising by 13 points, or 0.6%, to 2,397.

 

Investors bet the Federal Reserve will buy back bonds and take other steps to encourage borrowing and spending after today's disappointing jobs report. 

 

The Labor Department said the U.S. economy shed 95,000 jobs after losing a revised 57,000 in August. Economists had expected the number of jobs to be unchanged.

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The unemployment rate remained at 9.6%. Economists had predicted it to rise to 9.7%. The private sector added 64,000 jobs, less than the projected 75,000.

 

"The market really pays attention to private payrolls, and since they came in weaker than expected, that indicates that businesses are still cautious," said Linda Bakhshian, a portfolio manager at Federated Investors (FII). "What's driving the market today are expectations that quantitative easing is coming and probably sooner rather than later."

 

On Wednesday, Automatic Data Processing (ADP) said U.S. companies shed 39,000 jobs in September after adding 10,000 in August. The drop disappointed analysts, who had been looking for an increase of 18,000 payrolls.

 

Alcoa (AA) was leading the blue-chip rally, rising 6.4% to $12.98 after the aluminum maker's third-quarter earnings beat estimates late Thursday. Excluding certain items, the company earned 9 cents a share, beating estimates of 5 cents. Sales of $5.3 billion exceeded expectations for $4.95 billion. Alcoa was the first Dow component to report third-quarter results.

 

Fellow industrial stocks Boeing (BA) and Caterpillar (CAT) were also gaining after wholesale inventories grew a better-than-expected 0.8% in August, the Commerce Department said. Economists, according to Briefing.com, had been looking for an increase of 0.4%.

 

Shares of Freeport-McMoRan Copper & Gold (FCX) were rising 3.9% to $94.94 after Barclays (BCS) boosted its price target to $130 from $120.

 

Fertilizer stocks were rallying after the U.S. Department of Agriculture cut its supply forecasts for corn, soybeans and wheat. Potash Corp. of Saskatchewan (POT) was rising 2.6% to $144.57, while Mosaic (MOS) was up 8.7% to $66.87 and CF Industrial Holdings (CF) was up 11% to $109.91.

 

Kraft (KRT) and Verizon (VZ) were the Dow's biggest laggards.

 

Bill Ackman's hedge fund Pershing Square Capital Management picked up a 16.5% stake in J.C. Penney (JCP), according to a regulatory filing. CNBC said Pershing Square also bought an 11% stake in spirits company Fortune Brands (FO). J.C. Penney's stock was gaining 5.3% to $33.31 and Fortune's stock was rising 7.7% to $56.

 

Shares of Motorola (MOT) were losing 2% at $8.42 after Citigroup (C) downgraded the stock to "hold" from "buy."

 

Shares of ImmunoGen (IMGN) were rising 2.5% to $6.87 on news that the "armed antibody" drug that it's developing with Roche saw a higher response rate and lower toxicity than the breast cancer drug Herceptin.

 

Penn National Gaming (PENN) said it will enter the Las Vegas market, sending shares down 1.5% to $30.42 as investors questioned the casino company's ability to thrive in the recession-battered region.

 

Japan approved new stimulus funding of 5.05 trillion yen ($61 trillion) to bolster its sluggish economy. 

 

Hong Kong's Hang Seng rose 0.3%, while Japan's Nikkei lost 1%. The FTSE in London was slipping 0.3%, and the DAX in Frankfurt was little changed.

 

In commodity markets, crude oil for November delivery was adding 47 cents at $82.14 a barrel. The December gold contract was gaining $6.70 to $1,341.70 an ounce.

 

The dollar was trading lower against a basket of currencies, with the dollar index down by 0.2%. The benchmark 10-year Treasury note strengthened 9/32, diluting the yield to 2.353%.

 

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