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Jobs data boosts Wall Street confidence

By MICHAEL J. MARTINEZ, AP Business Writer

NEW YORK - Investors bid stocks sharply higher Friday after the Labor Department reported slowing job growth, which many on Wall Street believed would keep the
Federal Reserve from raising interest rates next week.

The economy created just 113,000 jobs last month, far less than the 145,000 expected by economists and down from 121,000 created in June. Unemployment rose to 4.8 percent from 4.6 percent, and wage growth was constant at 0.4 percent.

That was exactly what Wall Street wanted — slower job growth and steady wage growth that would likely keep inflation from taking hold, and thus allow the Fed to stop raising rates. The Fed's Open Market committee meets Tuesday to weigh whether the nation's benchmark rate should be increased by a quarter percentage point to 5.5 percent.

The response to the jobs report indicated that a growing number of investors believe that the Fed might actually not raise rates Tuesday — a marked shift from a few weeks ago, when an August rate hike was almost a foregone conclusion. Of course, if the central bank does implement another quarter-point rate increase, there is likely to be widespread disappointment and a big pullback on Wall Street.

In midmorning trading, the Dow Jones industrial average rose 65.88, or 0.59 percent, to 11,308.47.

Broader stock indicators also climbed higher. The Standard & Poor's 500 index added 7.96, or 0.62 percent, to 1,288.23, and the Nasdaq composite index gained 21.12, or 1.01 percent, to 2,113.46.

Bonds surged on the jobs report, with the yield on the benchmark 10-year Treasury note falling to 4.89 percent from 4.96 percent late Thursday. The dollar rose against most major currencies, while gold prices fell.

Crude oil futures fell for a second straight session as Tropical Storm Chris, which traders had feared would damage oil rigs and refineries along the Gulf of Mexico, was downgraded to a tropical depression. A barrel of light crude was quoted at $75.35, down 11 cents, on the New York Mercantile Exchange.

Higher oil prices in the second quarter helped Occidental Petroleum post a surge in revenue, but second-quarter net profits declined year-over-year due to a one-time gain a year ago. Occidental fell $1.20 to $105.74.

Medco Health Solutions Inc., the pharmacy benefit manager, rose $2.62 to $61.72 after second-quarter profits jumped 26 percent, beating analysts' forecasts by 4 cents per share.

The tech sector saw some modest pressure after Apple Computer Inc. said it would have to restate earnings reports due to errors made in account for employee stock option grants, an increasing problem for corporate America. Apple, which said earnings reports dating back to 2002 were unreliable, lost $2.11 to $67.48.

Gateway Inc. slid 11 cents, or 6.9 percent, to $1.48 on its latest earnings report, which saw the computer maker swing to a loss for the quarter due to shrinking profit margins and slow sales. Wall Street had expected a modest profit.

Advancing issues outnumbered decliners by a 8 to 1 margin on the
New York Stock Exchange, where volume came to 225.39 million shares, compared with 197.72 million traded at the same point Thursday.

The Russell 2000 index of smaller companies was up 9.50, or 1.35 percent, at 713.88.

Overseas, Japan's Nikkei stock average rose 0.19 percent. In afternoon trading, Britain's FTSE 100 was up 0.84 percent, Germany's DAX index surged 1.57 percent, and France's CAC-40 gained 1.46 percent.

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