WALL STREET -- The Dow Jones industrial average is closing above 11,000 for the first time in five months as hopes build that the Federal Reserve will take more action to get the economy going again.
According to preliminary calculations, the Dow is closed up 58 points Friday before the Columbus Holiday, or 0.5 percent, at 11,006.
A weaker jobs report early Friday added to a series of tepid economic indicators in recent weeks that have added to expectations that the Fed will announce new steps to encourage borrowing when it meets in early November.
High unemployment remains a major hurdle as economic growth continues to be sluggish. The Labor Department's report, considered the most important piece of news on the economic calendar, did little to alter the view that the economy remains weak.
Jason Pride, director of investment strategy at wealth management firm Glenmede, said “by not being stronger, (the jobs report) gives them the window of opportunity to take action.”
Anticipation of the Fed making a move has driven bond yields and the dollar sharply lower in recent days. Bond yields fell again Friday after the jobs report was released. The yield on the two-year note hit a new record low, but the dollar crept slightly higher.
The Fed's goal, if it starts buying bonds again, would be to drive interest rates down further from their already low levels and spark borrowing and spending. Lower rates could also eventually drive investors into riskier assets like stocks or into currencies in countries with more attractive interest rates.
Scott Brown, a senior vice president and chief economist at Raymond James & Associates, predicted the Fed would announce a specific plan when it wraps up its next meeting Nov. 3. But Brown warned not to expect an immediate improvement in the economy after the Fed starts buying bonds again.
“It's a long process. It doesn't happen overnight,” Brown said. “The key factor in a recovery is time.”
The S&P 500 index gained 7, or 0.6 percent, to 1,165, and the Nasdaq gained 18, or 0.8 percent, to 2,402. About three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 945 million shares. The yield on the 10-year Treasury note, which helps set rates on loans including mortgages, fell to 2.36 percent from 2.38 percent late Thursday.
The dollar rose slightly against other currencies, stemming its recently decline. Gold rose to $1,344.10 an ounce after falling earlier in the day. Gold has been soaring as traders consider it a safe alternative to the dollar.
The dollar hit an eight-month low against the euro Thursday and has recently touched a 15-year low against Japan's yen. It has been under pressure because traders expect any action by the Fed would effectively add billions of dollars into the currency market.
The government said private employers added 64,000 workers last month, short of the 75,000 economists expected. Overall, 95,000 jobs were slashed as governments laid off workers, including temporary census employees. The unemployment rate held steady at 9.6 percent in September. Economists polled by Thomson Reuters were expecting it to rise to 9.7 percent.
Employers have not started hiring a lot of workers because of worries about potential tax hikes and unknown costs associated with health care and financial regulatory reform passed earlier this year. Consumers have also kept their spending down, which has kept a lid on hiring.
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