Despite rally's fade, Dow finishes at nearly 5-year high

Updated: 7:35 p.m. ET

Stocks gave up most of a rally today, but buying very late in the session pushed the Dow Jones industrials ($INDU) to their best close in nearly five years.

The initial buying was set off when the Labor Department said the U.S. unemployment rate had dropped to 7.8% in September, its lowest level since 2009. September payrolls grew by 114,000, the department said, a touch below the consensus estimate of 120,000 jobs. But estimates for payroll growth in July and August grew by 86,000, suggesting that the summer slowdown wasn't as bad as thought.

The news of the falling unemployment rate cheered the White House, reeling from President Obama's performance in Wednesday's debate against Mitt Romney. It dismayed Republicans. "This is not what a real recovery looks like," Romney said in a statement. Former General Electric (GE) CEO Jack Welch went so far as to accuse the Labor Department of cooking the numbers. Labor Secretary Hilda Solis said she was "insulted" by the idea.

The rally faded on its own, however. The pullback began when big technology stocks, such as Apple (AAPL), Amazon.com (AMZN), Facebook (FB) and Zynga (ZNGA), stumbled and accelerated on declines in energy and financial stocks.

The Dow closed up 35 points to 13,610, its best close since Dec. 10, 2007. The blue chips had been up as many as 87 points in the morning. The Standard & Poor's 500 Index ($INX) was off slightly to 1,461. The Nasdaq Composite Index ($COMPX) slipped 13 points to 3,136.

Article continues below. The Nasdaq-100 Index ($NDX) was off 17 points to 2,812. The index was pressured by Apple, down $14.21 to $652.59, largely because of strong quarterly results of Samsung, whose smart phones are taking share from the iPhone. The stock is down 7.3% since hitting an intraday high of $705.07 on Sept. 21.

Stocks did finish higher after two weeks of declines. The Dow finished up 1.3%, the S&P 500 up 1.8%, and the Nasdaq up 1.2%. For the year, the Dow is up 11.4%, with the S&P 500 up 16.2% and the Nasdaq up 20.4%.

Today was the first anniversary of co-founder Steve Jobs' death.

Next week is light on economic reports, but the third-quarter earnings season starts after Tuesday's close when Dow component Alcoa (AA) reports its results. Costco Wholesale (COST) reports on Wednesday, and JPMorgan Chase (JPM) and Wells Fargo (WFC) report on Oct. 12.

Markets for the week
			10/5/2012			9/28/2012			% chg.			YTD chg.
Dow Industrials			13,610.15			13,437.13			1.29%			11.40%
S&P 500			1,460.93			1,440.67			1.41%			16.17%
Nasdaq			3,136.19			3,116.23			0.64%			20.38%
Russell 2000			843.18			837.45			0.68%			13.80%
Crude oil			$89.88			$92.19			-2.51%			-9.06%
(per barrel)			0.00			0.00			0.00%			0.00%
U.S. Dollar Index			79.43			80.03			-0.75%			-1.36%
10-yr. Treasury			1.73%			1.64%			5.80%			-7.43%
Gold			$1,780.80			1,773.90			0.39%			13.66%

Why the rally faded
Until today, the Dow had not been able to close above 13,600 despite repeated assaults over the past month. The S&P 500 peaked at 1,466 on Sept. 14 and appears to have stalled out.

Why the market struggled today may be that computerized sell programs were set to generate sell orders at those levels.

It also may be that many investors are worried that the government won't be able to stop the triggering of the so-called fiscal cliff. That's a provision agreed to last year that lets the Bush-era tax cuts expire along with large, automatic spending cuts. That would probably set off a quick decline in U.S. economic growth.

There were those very hotly debated charges of employment report manipulation that exhausted many traders, and, lastly, Europe's debt crisis continues.

• A defense of the numbers.
• August is a difficult month to measure.
  
• Jack Welch's conspiracy theory.

Energy prices -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Crude oil (-CL)			$89.88			$91.71			-2.51%			-9.06%
(per barrel)
Heating oil (-HO)			$3.1559			$3.1884			-0.10%			8.29%
(per gallon)
Natural gas (-NG)			$3.3960			$3.4060			2.29%			13.62%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.9525			$2.9429			1.11%			11.10%
(per gallon)
Brent crude			$112.02			$112.58			-0.33%			4.32%
(per barrel)
Retail gasoline			$3.7890			$3.7840			0.05%			15.66%
(per gallon; AAA)

Crude oil, gold fall
Crude oil (-CL) in New York settled down $1.83 to $89.88 a barrel, and Brent crude was down 85 cents to $111.73 a barrel.

Gold (-GC) settled down $15.70 to $1,780.80 an ounce. For the week, gold was up 0.4%; it's up 13.7% for the year.

Silver (-SI) was off 52.9 cents to $34.572 an ounce. It's flat on the week and is up 23.9% for the year. Copper (-HG) was off slightly to $3.778 a pound. It was up slightly for the week and up 10% for the year.

The 10-year Treasury yield rose to 1.732% from Thursday's 1.665%.

A pretty good jobs report
The unemployment rate is derived from a telephone survey of about 50,000 households (often called the "household survey").

Most economists had expected the rate to rise to 8.2%. It fell because the number of workers estimated to be working rose by 873,000, the biggest gain since June 1983. The number of unemployed fell by 456,000.

The number is famously volatile, in part because it includes people who are self-employed. It is not clear how it will be revised in the next two months. The report -- like many government reports -- is revised twice after its initial release to reflect the inclusion of more data.

Still, the household survey suggests that unemployment fell among just about all groups the Labor Department tracks. The alternative unemployment measure, which amalgamates those unemployed with those not looking for work or taking part-time work, was unchanged from August at 14.7% but was down from 15% in July and 16.4% a year ago.

The payroll gains weren't nearly so gaudy and probably reflect the economy more clearly. Private-sector employment grew by 104,000. But that gain reflects the upward revisions in July and August.

The biggest gains came in the education component of state government. There were also gains in health care, transportation and professional and business services.

Manufacturing declined, including automobile manufacturing. Construction employment grew by 5,000.

Residential construction employment at 564,800 was up 1,100 as evidence builds of a small but real housing recovery. But that's still down 457,200 from the peak of the housing boom in April 2006.

Two other areas cheered economists: The average workweek increased to 34.5 hours from 34.4 hours last month, and the average hourly earnings rose 7 cents to $23.58.

Big tech is the market's weak link
Apple isn't alone in being pressured. Amazon.com, Microsoft (MSFT), Oracle (ORCL) and Netflix (NFLX) were lower.  (Microsoft is the publisher of MSN Money.)

So were Green Mountain Coffee Roasters (GMCR), Marriott International (MAR) and First Solar (FSLR). First Solar, down $2.48 to $20.07, was downgraded to "sell" because of equipment problems. Avian Securities cited loose core plates on the backs of the panels that could cause fires or possible electric shock.

Green Mountain fell $1.50 to $22.13 because of reports of new competition for its Keurig single-cup coffee maker.

The most spectacular loss -- by percentage terms perhaps -- was game developer Zynga, down 34 cents to $2.48 after warning that third-quarter results were going to be weak and prospects going forward are problematic.

Zynga is one of the biggest drivers of revenue to Facebook, whose shares were down $10.4 to $20.91.

Home Depot leads the Dow
Twenty-one of the 30 Dow stocks were higher, led by Home Depot (HD) and Boeing (BA). UnitedHealth (UNH) and Bank of America (BAC) were the laggards. Bank of America was the Dow's top performer for the week; UnitedHealth was fourth. The two are also the best-performing Dow stocks of 2012, up 67.3% and 52.9%, respectively.

Meanwhile, 269 S&P 500 stocks were ahead, with Avon Products (AVP) the leader. Andrea Jung, the chairman and former CEO will stop down but remain an advisor to the board.

First Solar and Chipotle Mexican Grill were the laggards. The latter fell after hedge-fund manager David Einhorn thought it was vulnerable because of its high valuation.

Only 39 Nasdaq-100 stocks had gains, led by Monster Beverage (MNST) and Dollar Tree (DLTR). Green Mountain and Citrix Systems (CTXS) were the laggards.

Short hits from the markets -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.100%			0.100%			11.11%			900.00%
5-year Treasury note			0.667%			0.623%			5.87%			-19.64%
10-year Treasury note			1.732%			1.665%			5.80%			-7.43%
30-year Treasury bond			3.032%			3.032%			0.00%			4.95%
Currencies
U.S. Dollar Index			79.428			79.440			-0.75%			-1.36%
British pound			1.6142			1.6200			-0.11%			3.89%
(in U.S. $)
U.S. $ in pounds			£0.620			£0.617			0.11%			-3.74%
Euro in dollars			$1.30			$1.30			1.39%			0.59%
(in U.S. $)
U.S. $ in euros			€ 0.767			€ 0.768			-1.38%			-0.58%
U.S. $ in yen			78.80			78.49			1.07%			2.21%
U.S. $ in Chinese			6.35			6.32			1.03%			0.31%
yuan
Canada dollar			$1.022			$1.020			0.54%			4.19%
(in U.S. $)
U.S. dollar			$0.979			$0.980			-0.46%			-4.02%
(in Canadian $)
Commodities
Gold (-GC)			$1,780.80			$1,796.50			0.39%			13.66%
(per troy ounce)
Copper (-HG)			$3.778			$3.786			0.53%			9.95%
(per pound)
Silver (-SI)			$34.5720			$35.1010			-0.01%			23.85%
(per troy ounce)
Wheat (-ZW)			$8.5750			$8.6925			-4.99%			31.37%
(per bushel)
Corn (-ZC)			$7.4800			$7.570			-1.09%			15.70%
(per bushel)
Cotton			$0.7149			0.7209			-1.19%			-22.02%
(per pound)
Coffee			$1.6810			1.7505			-3.11%			-26.80%
(per pound)
Crude oil (-CL)			$89.88			$91.71			-2.51%			-9.06%
(per barrel)