* Data signals stabilization in the labor market
* Investors fret about interest rates as dollar jumps
* Dow up 0.2 pct; S&P 500 up 0.6 pct; Nasdaq up 1 pct
(Updates to close)
By Caroline Valetkevitch
NEW YORK, Dec 4 (Reuters) - U.S. stocks advanced on Friday
as data showed the economy shed far fewer jobs than expected
last month, brightening the outlook for the economy and
profits.
Economically sensitive sectors like industrials,
technology, consumer and financials made the day's best
showing. The S&P financial index <.GPSF> rose 1.8 percent,
while shares of manufacturer 3M Co <MMM.N> gained 1.4 percent
to end at $78.24, leading the Dow higher.
Limiting the market's advance was the dollar's strength,
which caused commodity prices and related stocks to fall, and
helped fuel expectations that the U.S. Federal Reserve might
have to start considering raising interest rates. Even so,
more stocks rose than fell.
U.S. employers cut 11,000 jobs in November, the smallest
loss since the recession began in December 2007, and the
unemployment rate also dipped, according to a Labor Department
report. For details, see []
"The internals of the official non-farm payrolls release
spoke to a much broader improvement in the overall employment
picture," said Peter Kenny, managing director at Knight Equity
Markets in Jersey City in New Jersey.
An improving labor market is considered crucial in
fostering a recovery and in bolstering consumer confidence,
which would help increase U.S. corporate profits.
To foster a recovery, the Federal Reserve has kept U.S.
benchmark interest rates close to zero percent, a stance that
analysts said might have to change as the economy showed more
signs of life.
The Dow Jones industrial average <> gained 22.75
points, or 0.22 percent, to end at 10,388.90. The Standard &
Poor's 500 Index <.SPX> added 6.06 points, or 0.55 percent, to
finish at 1,105.98. The Nasdaq Composite Index <> rose
21.21 points, or 0.98 percent, to close at 2,194.35.
At one point during the session, stocks rallied briskly,
with the Dow, the S&P 500 and the Nasdaq climbing to their
highest levels in 15 months. The Dow rose as high as
10,516.70, while the S&P 500 climbed as high as 1,119.13, and
the Nasdaq jumped as high as 2,214.39.
For the week, the Dow rose 0.8 percent, the S&P 500 gained
1.3 percent and the Nasdaq advanced 2.6 percent.
The Nasdaq got a lift from chipmakers, including Intel
Corp <INTC.O>, which advanced after an upbeat forecast from
TSMC <2330.TW><TSM.N>, the world's biggest contract chip
maker. Intel's stock shot up 3 percent to $20.46. The
semiconductor index <.SOXX> was up 2.1 percent for the day,
and for the week, the SOXX climbed 8.2 percent, its biggest
one-week percentage gain since July.
Falling commodity prices weighed on natural resource
companies, sending the S&P materials index <.GSPM> down 1.2
percent and the S&P energy index <.GSPE> down 0.8 percent.
The U.S. dollar index <.DXY>, which measures the greenback
against a basket of six other major currencies, jumped 1.5
percent on the upbeat jobs data.
In contrast, U.S. crude oil futures <CLc1> fell 99 cents
to settle at $75.47 a barrel.
Since the broader market hit a bottom in early March,
stocks and the dollar have had a strong inverse correlation.
When the dollar falls, stocks tend to rise and vice versa.
That correlation partly reflects the so-called carry
trade, whereby investors borrow a currency offering relatively
low borrowing costs in order to invest the proceeds in
higher-yielding assets denominated in that low-yield
currency.
A stronger U.S. dollar caused investors to unwind some of
their dollar carry-trade positions, according to analysts.
The government also reported that the U.S. unemployment
rate slipped in November to 10.0 percent from October's rate
of 10.2 percent, which was a 26 1/2-year high.
Stocks also got some help from other government data
showing inventories at U.S. factories rose for the first time
in over a year in October, while factory orders increased 0.6
percent. []
Volume was above average on the New York Stock Exchange,
with 1.57 billion shares changing hands, above last year's
estimated daily average of 1.49 billion, while on the Nasdaq,
about 2.32 billion shares traded, above last year's daily
average of 2.28 billion.
Advancing stocks outnumbered declining ones on the NYSE by
a ratio of 7 to 3, while on the Nasdaq, about 10 stocks rose
for every three that fell.
(Reporting by Caroline Valetkevitch; Additional Reporting by
Ellis Mnyandu; Editing by Jan Paschal)
((caroline.valetkevitch@thomsonreuters.com; +1 646 223 6393;
Reuters
Messaging:caroline.valetkevitch.reuters.com@reuters.net))
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