Drop in jobless rate helps stocks gain

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 9 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.

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.

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 3.65 percent, the highest yield since last May. The 10-year yield is widely used to set borrowing rates on a wide variety of loans.

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. 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 past 10 weeks.- AP