Markets gain as traders take jobs report in stride

NEW YORK - A disappointing jobs report couldn't stop the stock market from having a strong start to the new year.

Stocks zigzagged for much of yesterday but closed higher as investors took in stride the Labor Department's news that employers cut 85,000 jobs in December, far more than the 8,000 that analysts expected. The disappointing numbers were offset by a pleasant surprise: November's report was revised to show the first job gains in nearly two years.

The Dow Jones industrial average tacked on 11 points to end at a 15-month high, while broader indicators logged bigger gains. All the major indexes posted advances for the week, a reassuring sign given that stocks often end the year higher after a strong start to January.

The December job losses were disconcerting as a rebound in employment is key to a sustained recovery in the economy. But the market likely focused on the fact that a pickup in the labor market often lags other improvements after a recession.

Reports next week will bring an early look at how companies did in the October-December quarter. Investors are looking for companies to report stronger sales and outlooks for the rest of this year.

Peter Cardillo, chief market economist at the brokerage Avalon Partners Inc. in New York, said the trend in the labor market was still positive. He noted many of the December cuts were in the construction industry, which is likely due to seasonal slowdowns.

"It was a disappointment, but I think we're on the right track," he said. "I think unemployment will begin to show growth very shortly."

The Dow rose 11.33, or 0.1 percent, to 10,618.19. The Standard & Poor's 500 index rose 3.29, or 0.3 percent, to 1,144.98, its fifth straight advance. The Dow and the S&P 500 index ended at their highest levels since Oct. 1, 2008.

The Nasdaq composite index rose 17.12, or 0.7 percent, to 2,317.17.

For the week, the Dow advanced 1.8 percent, the S&P 500 index jumped 2.7 percent, and the Nasdaq added 2.1 percent. Most of the climb came Monday, the first trading day of the year, when improving news on manufacturing in China, the United States, and Europe hinted at a strengthening global economy.

The climb for the week was a welcome sign for 2010. Of the last 36 times when the S&P 500 index carved gains in the first five days of January, it ended the year higher 31 times, or 86.1 percent of the time, according to the Stock Trader's Almanac.

Next week, investors will get reports on retail sales and industrial production. A handful of corporate earnings reports from the final quarter of 2009 will start to arrive. Aluminum producer Amcoa Inc. is scheduled to report its results after the closing bell Monday and banker JPMorgan Chase & Co. reports on Friday.

The Russell 2000 index of smaller companies rose 2.59, or 0.4 percent, to 644.56.

Britain's FTSE 100 rose 0.1 percent. Germany's DAX index gained 0.3 percent, while France's CAC-40 rose 0.5 percent. Japan's Nikkei stock average rose 1.1 percent.