US stocks shrug off mixed unemployment report

NEW YORK (AP) — Stocks eked out modest gains on Friday after the government reported a sharp drop in the unemployment rate.

The Labor Department said the unemployment rate dropped to nine percent in January, the lowest rate since April 2009 and a sharp fall from 9.4 percent in December. Economists had expected the rate would rise to 9.5 percent, in part because of harsh winter weather that affected much of the country.

The Dow Jones industrial average rose 29.89 points, or 0.3 percent, to close at 12,092.15. The Dow climbed 2.3 percent for the week and has posted gains for nine of the last 10 weeks. The average of 30 large company stocks cleared the 12,000 mark Tuesday, the first time it closed above that level since June 2008.

The Standard & Poor’s 500 index rose 3.77 points, or 0.3 percent, to 1,310.87. The Nasdaq composite gained 15.42 points, or 0.6 percent, to 2,769.30.

At the same time, the government said that 36,000 new jobs were created last month, the fewest in four months. The slow job growth left some analysts doubting that the economic recovery is gathering momentum.

“We are seeing some improvements but the disappointing jobs creation shows that the job market is not back to where we need it to be,” said Ryan Detrick, senior strategist at Schaeffer’s Investment Research. The lack of new jobs will likely lead the Federal Reserve to continue its efforts to boost the economy, he said.

Jim O’Sullivan, chief economist at MF Global, said some investors took a skeptical view of the report. “The information value of this report is limited because it was obviously affected by the weather,” he said.

The unemployment rate fell even as the economy added few jobs because many people who are unemployed gave up hunting for work, O’Sullivan said. The Labor Department includes only those actively looking for jobs when calculating the main unemployment rate.

Bond traders, however, took the employment report as evidence of a stronger job market. They drove Treasury prices down and yields up. The yield on the benchmark 10-year Treasury note jumped to 3.64 percent, the highest yield since last May.