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Wall Street bounces back from dismal jobs report
ATTENTION - UPDATES, ADDS comment, company, bond info, global stocks ///
NEW YORK - Wall Street shares recovered from steep early losses and finished mostly higher Friday as the market was able to shake off a jump in unemployment that sparked renewed fears of a US recession.
Some analysts said the market had anticipated the weak labor report and had priced this is with Thursday's hefty decline, setting the stage for investors to scoop up beaten-down shares.
The Dow Jones Industrial Average of blue chips bounced back from an early slide of nearly 150 points to rise 32.73 points (0.29 percent) to close at 11,220.96.
The tech-heavy Nasdaq composite recouped most of its hefty losses of some 1.9 percent, ending with a modest decline of 3.16 points (0.14 percent) at 2,255.88.
The broad-market Standard & Poor's 500 index rose 5.48 points (0.44 percent) to 1,242.31.
Market action came as the Labor Department said the US unemployment rate jumped to a five-year high of 6.1 percent as 84,000 jobs were slashed in August.
The report -- considered one of the best indicators of economic momentum -- marked the eighth consecutive month of shrinking payrolls, and was worse than expected by private economists, sparking fresh worries about recession.
Analysts at Briefing.com said the Wall Street action showed "an impressive turn in sentiment" despite the bleak data.
"The tone through midday had been largely pessimistic, but buyers emerged as stocks posted limited losses in the face of disappointing economic data and continued threats of a global slowdown," the analysts said.
Still, the Dow slumped 2.8 percent for the week, with the S&P index losing 3.16 percent and the Nasdaq down a whopping 4.2 percent, highlighting the grim economic outlook.
"Today's employment report signaled the death knell of hope that the US can avoid recession," said Scott Anderson, economist at Wells Fargo.
"You could almost hear the bulls on Wall Street throwing themselves on their swords over the past five trading days. The payroll report should end the debate that the economy is doing well."
Although official data showed the US gross domestic product (GDP) grew at a robust 3.3 percent in the second quarter, many analysts say that figure was skewed by a surge in exports and helped by spending from a massive tax rebate programme.
The payrolls report "confirms that the improvement in GDP growth to 3.3 percent in the second quarter was just a head-fake," said Nigel Gault, economist at Global Insight.
"We expect growth to slow in the current quarter to just over 1.0 percent and then turn negative in the fourth quarter."
Financial stocks led the late-day rebound on Wall Street. JPMorgan Chase rallied 4.46 percent to 39.60 dollars and Bank of America gained 5.3 percent to 32.23.
Some analyst said the rebound began on a report that ailing investment bank Lehman Brothers may sell parts of its real estate and asset management units. Lehman shares jumped 6.8 percent to 16.20 dollars.
Oil companies were lower on the drop in crude prices. ExxonMobil lost 0.68 percent to 75.62 dollars and Chevron shed 1.23 percent to 80.22.
SanDisk, maker of computer memory technology, surged 31 percent to 17.64 dollars after confirming discussions on a possible tie-up with South Korean giant Samsung Electronics.
Bonds ended mixed. The yield on the 10-year US Treasury bond rose to 3.660 percent from 3.643 percent Thursday and that on the 30-year bond eased to 4.276 percent against 4.281 percent. Bond yields and prices move in opposite directions.
The rebound on Wall Street ended a string of hefty declines on world stock markets.
The London FTSE 100 blue chip index slid 2.26 percent to 5,240.70, its third fall of more than two percent in as many days.
In Paris the CAC 40 index fell 2.49 percent to 4,196.66, after dropping more than three percent on Thursday. The DAX in Frankfurt shed 2.42 percent to close at 6,127.44.
- AFP /ls
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