S&P 500 Sets Record On Jobs Data

Includes: DIA, QQQ, SPY
by: Judith Levy

The S&P 500 hit a record last week as newly released employment figures relieved concerns that troubles in the mortgage market will spark a recession. Homebuilder stocks, helped by a Citi Investment Research report that said their prices are cheap, rose 12%, their biggest gain since November 2000. The rally was sparked by a report from the Labor Department that said American payrolls increased by 110,000 jobs in September. Also, August's 4,000-job decrease was revised to a gain of 89,000. "The jobs report suggests continued economic growth, which should translate to continued profit growth and good market performance," said John Lynch, chief market analyst at Evergreen Investments LLC. The S&P 500, which gained 2% over the past week, has bounced back 11% since mid-August, erasing $1 trillion of losses, Bloomberg reports. Financial stocks gained a collective 4.5%, with Fannie Mae rising 11% and Morgan Stanley 9.4%. The DJIA added 1.2% to close the week at 14,066.01, while the Nasdaq gained 2.9% to 2,780.32, its highest in almost six years. "Stocks are cheap relative to bonds," said Legg Mason Inc.'s Bill Miller. "I don't know why anyone would buy a 10-year Treasury." In related news, the dollar had its biggest weekly gain against the yen in over a year, and against the euro since August, on signs the economy will make it through the housing downturn. "People overstated the downside risk to the U.S. economy, and we're seeing the adjustment to the dollar," said Robert Sinche, global currency strategist at Bank of America.

Sources: Bloomberg I, II
Commentary: Employment Rebound Drives Stocks Upward - Economic Week in ReviewThe Jobs Report: 'Never Mind'Strong Payrolls Number: Good Sign For U.S. Equities
Stocks/ETFs to watch: SPY, QQQQ, DIA

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