Wall Street rises on jobs data

US stock markets were set to end the week at their highest levels since the start of the year after US employers cut fewer jobs than expected last month and the Federal Reserve stepped up efforts to reduce stresses in the credit markets.

According to the Labor Department, 20,000 jobs were shed in April - the fourth consecutive month of losses - but that was far fewer than many feared and the unemployment rate moderated somewhat.

That better-than-expected data, as well as stable numbers on growth and manufacturing activity released earlier in the week, has reinforced impressions that while the US economy is languishing it is still clinging on to sluggish growth.

News that US and European central banks plan to take further steps to pump liquidity into strained credit markets, also boosted stocks.

The benchmark S&P 500 rose 0.3 per cent to 1,414.01 on Friday, while the Dow Jones Industrial Average added 0.3 per cent to 13,048.35. The Nasdaq Composite fell 0.3 per cent to 2,473.21.

Over an uneven week the major indices hit their highest levels since early January, with the S&P 500 breaking the 1,400 level and the Dow Jones settling above 13,000.

In April as a whole, the S&P 500 added about 4.8 per cent - its best monthly showing since the end of 2003 and its first positive month since last October.

The week began in downbeat fashion, with stocks falling for three sessions on the back of data showing that two pillars of the US economy – house prices and consumer confidence – continue to crumble.

Ahead of the rate decision from the Federal Reserve on Wednesday, volumes were on the low side, boosted only by news that Mars, the confectioner, would purchase chewing-gum heavyweight Wrigley for $23bn. Wrigley shares soared 21.6 per cent to $75.93 over the week.

Energy and material stocks proved a consistent drag on indices however, as commodity prices slipped off recent highs Exxon Mobil posted disappointing results.

Exxon fell 2.2 per cent to $90.43, Monsanto slipped 8.7 per cent to $114.56 and Freeport-McMoRan Copper & Gold dipped 5.3 per cent to $110.70.

The two sectors rallied on Friday, paring gains in other sectors, but could not overcome earlier losses, and they closed the week down 1.4 per cent and 2.8 per cent respectively.

Energy’s discomfort proved a boon for consumer discretionary stocks however and the sector added 2.4 per cent over the week..

On Wednesday the Fed cut interest rates and sentiment initially wobbled but then turned positive the following day as Financial and technology stocks raced ahead.

Symantec and Juniper Networks were among the biggest gainers over the week, climbing, 10.2 per cent to $19.27 and 6.1 per cent to $28.34..

Sun Microsystems took some of the shine off the sector on Friday though, after it reported a surprise third-quarter net loss. Over the week, its shares tumbled 16.8 per cent to $12.91.

Financials performed particularly well, adding 2.5 per cent over the week led by some of the institutions most badly damaged by the sub-prime crisis and the resulting credit crunch made ground.

Ambac, the bond insurer, surged 35.8 per cent to $5.24, Merrill Lynch added 7 per cent to $53.14 and CIT Group rose 18.6 per cent to $12.79.

The S&P 500 has now rallied about 10 per cent from its March lows but experts remain divided about whether that trend will continue.

Many are skeptical that US corporations can meet still optimistic earnings growth estimates for the full year, and point out that misses could weigh on equity markets.

Larry Smith, chairman and chief investment officer of Third Wave Global Investors, however argued that the focus on earnings is misleading

“When you talk about turning points it is never earnings that are driving things. Changes in the macro-environment right now are far more important.”

Rate-cutting and other liquidity measures by the Fed will ultimately succeed in restoring confidence and growth, Mr Smith said. Indeed certain measures of risk appetite have already picked up.

“People’s mindsets are very much in the recessionary camp and as those mindsets improve the stock markets will improve with it,” he said.