NEW YORK – Stocks jumped in light trading Friday after the government reported that the pace of job losses slowed in August to the lowest level in a year.
The Dow Jones industrial average gained 97 points to halve its loss for the week after the Labor Department said employers cut fewer workers last month. However, the report also showed that the ranks of the unemployed swelled to 9.7 percent, the highest level since June 1983.
Analysts had been expecting the rate to increase to 9.5 percent after unexpectedly dipping in July. The increase initially spooked the market, but stocks later recovered their losses and moved higher. Many economists expect the rate to top 10 percent by early next year.
Employers cut 216,000 jobs last month, fewer than the 276,000 lost in July and better than the 225,000 figure analysts had been expecting. Traders said it was an encouraging sign that the labor market could be righting itself.
“The overall picture is things are getting better,” said Ryan Larson, senior equity trader at Voyageur Asset Management.
Unemployment is widely seen as the economy’s biggest hurdle to recovery, and concerns about it have been weighing on the stock market. As long as job losses remain high, consumers could hold off spending money, which the U.S. economy badly needs to resume growth.
“The market is looking at directional changes, and so at this state of the economic recovery I think the fact that you see unemployment rising shouldn’t be that surprising,” said Thomas K. R. Wilson, managing director, institutional investments group at Brinker Capital in Berwyn, Pa.
Analysts said that the thin trading volume before the long holiday weekend made it difficult to conclude that a shift in investor sentiment was occurring. Markets will be closed on Monday for Labor Day.
Stock trading has been erratic over the past few weeks as a six-month rally slowed on worries that the market’s rise of more than 50 percent since March has been overdone.
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