- The Washington Times - Friday, December 5, 2008

UPDATED:

Wall Street rallied Friday despite a government report showing the U.S. economy lost more than half a million jobs in November, moving the unemployment rate up to 6.7 percent and making it the biggest monthly job loss in 34 years.

The stock markets spent most of the day awash in red ink in reaction to indications from the unemployment figures that the recession may last longer than anticipated.

But investors seemed to have second thoughts, apparently seeing a silver lining through the gloom.

They may hope that the jobless news could spur the government to enact a major stimulus package and lend the Big Three automakers the $34 billion that they have been pleading for with House and Senate committees.



At the closing bell, the Dow Jones Industrial Average soared 263.24, or 3.14 percent, to 8639.48, and the tech-laden Nasdaq zoomed up 63.75, or 4.41 percent, to 1509.31. The broader Standard & Poor’s 500 climbed 31.14, or 3.68 percent, to 876.36.

Yet another drop in oil prices, making gasoline cheaper down the road, also could have helped the markets change direction. The price of a barrel of oil at the close dropped $1.95 to $41.72. It peaked at about $147 a barrel only four months ago.

Despite the late session rally financial, technology and consumer issues led the way the day started badly after the Labor Department reported that the U.S. economy lost 533,000 jobs in November. That brought total unemployment to 6.7 percent the highest number of jobless since October 1993.

The payroll cuts jumped from a rate of 6.5 percent in October, though they were below the 6.8 percent rate for November that analysts had expected. But they marked the biggest monthly loss since December 1974.

Craig Peckham, an equities trading strategist with Jefferies & Co., a New York investment bank, said Friday’s trading showed that Wall Street generally took the jobless numbers “in stride.”

The severe November job loss resulted from the “massive correction” in September in which the “world changed radically,” Mr. Peckham told The Washington Times by phone.

The continuing deterioration of the employment situation in what has become a worsening recession brought the year’s total job losses to 1.9 million. Some economists have warned that the unemployment rate could hit 8 percent next year.

Worse was expected, with telecommunications giant AT&T announcing Thursday that it would cut another 12,000 jobs and chemical leader DuPont saying it would shed 2,500 workers.

“I fully expect that you’re going to see more job erosion,” Mr. Peckham said. But he said he did not expect to see another month in which half a million people would lose their jobs.

What the unemployment rate means for investors is that more job losses translate into even less consumer spending at a time when retailers already are expecting a big hole in their Christmas stockings and the Big Three auto dealers are on the brink of financial ruin.

Vehicle sales are at an annualized rate of 10.2 million, down from 17 million in 2007.

The chief executives of General Motors, Ford Motor Co. and Chrysler LLC appeared before the House Finance Committee Friday in their second consecutive day of appeals to Congress for $34 billion in loans. They have not been getting a warm reception on Capitol Hill, and they were peppered with questions again Friday.

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