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Originally published January 8, 2010 at 3:57 AM | Page modified January 8, 2010 at 5:25 PM

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Stocks gain as traders take jobs report in stride

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

AP Business Writers

S&P 500 index intraday trading


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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 Friday 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 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 new 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 following a recession.

"I don't think that anyone should expect a flip of a switch," said Linda Duessel, equity market strategist at Federated Investors. "We were losing 600,000, 700,000 jobs a year ago and we are now toggling around zero. There is nothing disappointing about that."

Figures from recent months were revised to show that the economy generated 4,000 jobs in November. But the revisions also showed a loss of 16,000 more jobs than previously estimated in October.

The government also reported the unemployment rate held at 10 percent. That raised concerns that unemployed or fearful consumers won't spend, making it harder for companies to generate the big profits investors have been predicting.

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 is 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. I think unemployment will begin to show growth very shortly," he said.

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.

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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 U.S. 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 Alcoa Inc. is scheduled to report its results after the closing bell on Monday and banker JPMorgan Chase & Co. reports on Friday.

In other trading, interest rates held in a narrow range on the bond market. The yield on the 10-year Treasury note rose to 3.84 percent from 3.83 percent late Thursday.

The dollar and gold both fell.

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

Three stocks rose for every two that fell on the New York Stock Exchange, where consolidated volume fell to 4.4 billion shares from 5.3 billion Thursday.

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.

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Business Writer Ieva M. Augstums contributed to this report from Charlotte, N.C.

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The Dow Jones industrial average closed the week up 190.14, or 1.8 percent, at 10,618.19. The Standard & Poor's 500 index rose 29.88, or 2.7 percent, to 1,144.98. The Nasdaq composite index rose 48.02, or 2.1 percent, to 2,317.17.

The Russell 2000 index, which tracks the performance of small company stocks, rose 19.17, or 3.1 percent, for the week to 644.56.

The Dow Jones U.S. Total Stock Market Index - which measures nearly all U.S.-based companies - ended at 11,706.74, up 321.63, or 2.8 percent.

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