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Stocks rise as investors see silver lining in jobs report

Traders work on the floor of the

Traders work on the floor of the New York Stock Exchange on Wall Street Friday, April 29, 2016. Credit: Bloomberg News / Michael Nagle

Stocks turned modestly higher Friday, after the U.S. government’s disappointing jobs report added to speculation that the Federal Reserve might keep interest rates low for another year. Investors were also weighing tepid U.S. earnings reports and persistent weakness in the global economy.

THE CLOSE ON WALL STREET: The Dow Jones industrial average was up 79.9 points, about 0.5 percent, at 17,740.6. The Standard & Poor’s 500 index added 6.5 points, about 0.3 percent, to 2,057.1, and the Nasdaq composite rose 19.1 points, about 0.4 percent, to 4,736.2.

OIL PRICES: About the same time, the price of benchmark U.S. crude oil was up 31 cents at $44.63 a barrel on the New York Mercantile Exchange. In London, Brent crude, used to price international oils, rose 27 cents to $45.28 a barrel.

JOBS, JOBS, JOBS: The government’s jobs report reinforced concerns that the U.S. economy is starting to slow. The U.S. Labor Department said employers created just 160,000 jobs in April. The unemployment rate remained steady at 5 percent. The amount of job creation was significantly below the 200,000 jobs that economists were expecting.

ANALYST’S OPINION: “Once again, we received evidence that the U.S. economy is just bumbling along and will most likely remain so until after the U.S. presidential election,” analyst Tom di Galoma, a managing director of fixed income at Seaport Global, wrote in a report to clients.

Di Galoma added that the April jobs report significantly reduces the possibility that the Federal Reserve will interest rates in June or even later this year. “In my view, a rate hike potential this year is nearing zero probability.”

That view appears to be widely held. Fed fund futures, which are securities that allow traders to bet on which way the Fed will move interest rates, show that a majority of investors do not expect the Fed to raise rates until February 2017.

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