Modest stock gains as jobless rate tops 10%

NEW YORK | Investors undaunted by a surprisingly weak jobs report found enough positive news to nudge stocks higher Friday.

News that the nation’s unemployment rate rose above 10 percent last month for the first time in 26 years didn’t derail the stock market’s strong gains in the week, which lifted major indexes more than 3 percent.

The rise in joblessness to 10.2 percent in October, while bad news for the economy, reassured some investors that the Federal Reserve will have to hold interest rates low for some time. That tends to weaken demand for the dollar, which in turn gives a boost to stocks.

“We got data today that suggests that interest rates are going to be on hold for a while,” said Max Bublitz, chief strategist at SCM Advisors.

Safe-haven assets such as Treasuries were mixed. Oil prices tumbled and gold topped $1,100 an ounce for the first time. Gold benefits when investors are worried about a weak dollar and inflation.

The jobs report bodes poorly for consumer spending, a key driver of the economy.

“The consumer remains cautious and if they remain cautious they don’t spend,” said Michael Feser, president of Zecco Trading.

The Dow Jones Industrial Average rose 17.46, or 0.2 percent, to 10,023.42, boosting its gain for the week to 311 points. The Standard & Poor’s 500 index rose 2.67, or 0.3 percent, to 1,069.30, while the Nasdaq composite index rose 7.12, or 0.3 percent, to 2,112.44. The Russell 2000 index of smaller companies fell 0.80, or 0.1 percent, to 580.35.

Bond prices mostly climbed. The benchmark 10-year Treasury note rose, pushing its yield down to 3.51 percent from 3.53 percent late Thursday.

Oil fell $2.12 to settle at $77.87 per barrel on the New York Mercantile Exchange. Gold rose $6.40 to settle at $1,095.70 an ounce on the New York Mercantile Exchange, adding 5.3 percent for the week.

Jeffrey Friedman, senior market strategist at Lind-Waldock, a futures brokerage, said the jobs report is worrisome. “We’re still losing jobs. 10.2 is not a good number. And in reality, it’s probably even higher,” he said.

In corporate news, Starbucks Corp. jumped $1.42, or 7.2 percent, to $21.12 after the coffee chain said late Thursday that its fourth-quarter profit rose, and it raised its fiscal 2010 earnings forecast because of an increase in customers.

General Electric Co. rose 6 percent after analysts raised their ratings on the stock. GE advanced 90 cents to $15.33; it was the biggest gainer among the 30 Dow industrials.

Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where consolidated volume came to 4.3 billion shares, compared with 4.9 billion Thursday.