- The Washington Times - Friday, May 8, 2009


Wall Street closed with gains Friday, following reports that the U.S. economy shed fewer jobs in April and most of its biggest banks have sufficient capital if the recession gets worse.

The Dow Jones Industrial Average close at 8,574.81, up 164.96 points. The broader Standard & Poor’s 500-stocks Index closed at 929.23, up 21.84 points, and the tech-heavy NASDAQ closed at 1,739, up 22.76 points.

Unemployment increased in April nearly a half percentage point, to 8.9 percent, as businesses laid off another 539,000 workers, the Labor Department reported before U.S. markets opened Friday.

However, the number of jobs lost last month was 94,000 less than the 633,000 lost in March and better than analysts expected.

The April jobs number was the lowest in the past six months. The unemployment rate was the highest since the recession in 1983.

The major markets are up roughly 25 percent since hitting 12-year lows in early March — a rally that largely has followed first-quarter reports by major U.S. banks that were better than expected.

The recent gains appear to show the worst of the recession might be over, but investors remain cautious and the markets still are down significantly from their October 2007 highs. The Dow lost 102 points Thursday.

The federal government Thursday gave 10 of the country’s 19 largest banks six months to raise roughly $75 billion as a cushion if the economy gets worse and high unemployment results in more people defaulting on loans.

Bank of America and Wells Fargo must raise $34 billion and $14 billion, respectively. Citibank must raise another $5.5 billion, according to the results of the federal government’s so-called “stress tests.”

“As we look more closely at the results, we see the capital shortages are manageable,” said Brian Lipps, a Charles Schwab & Co. vice president. “There’s a feeling that we’re on the way to a very real and sustainable recovery. Stocks are not cheap anymore, and the rally had created a feeling among investors that you have to get in now.”

Bank of America stock closed at $14,17, up 66 cents.

JPMorgan and Goldman Sachs were among the banks that passed the government tests. JPMorgan stock closed at $38.94, up $3.70.

The gains Friday also followed energy stocks, whose prices increased on rising oil prices. The price of a barrel increased by $1.55, to $58.01, on the New York Mercantile Exchange.

Exxon Mobil Corp. stock closed at $70.80 a share, up $1.87.

The unemployment news Friday followed the government’s report Thursday that the number of U.S. workers filing first-time unemployment claims last week was 601,000, roughly 34,000 less than in the previous week and the lowest in 14 weeks. However, continued unemployment continued to increase with 6.35 million filing claims in the week ending April 23, which was 56,000 more than in the previous week.

Overseas, Japan’s Nikkei stock average rose 0.5 percent. Britain’s FTSE 100 gained 1.44 percent, Germany’s DAX index rose 2.29 percent, and France’s CAC-40 gained 1.88 percent.

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