Stocks shot up like a rocket in the final hour of trading, shrugging off earlier losses triggered by the biggest monthly job loss in 34 years and the highest percentage of delinquent mortgages on record.
The Dow Jones Industrial Average gained 259.18, or 3.1 percent, to close at 8635.42, after being down as much as 200 earlier. The S&P 500 index gained 3.7 percent, while the Nasdaq also finished higher.
Art Cashin said low volume today was disappointing but found some cause for optimism.
“We probably have a couple more days or weeks to go through this but it’s encouraging that we continue to look like we’re in the bottoming process.”
It was a topsy-turvy week for the market: The Dow shed 700 points on Monday, snapping its best five-day winning streak in 75 years. The blue-chip index rose on Tuesday and Wednesday, only to fall 200 on Thursday.
The net effect was a loss of nearly 200 points, or 2.2 percent for the Dow.
The S&P lost 2.3 percent this week, while the Nasdaq shed 1.7 percent.
Seven of 10 key S&P sector indexes were lower for the week, led by energy, which fell 11 percent as oil settled at $40.81 a barrel, a four-year low. Chesapeake Energy dropped more than 34 percent this week.
Consumer-discretionary stocks were the week's best performer, climbing 4 percent.
Two Dow components are now in positive territory for the year: Wal-Mart , up 23 percent, and McDonald's , up 6 percent.
It was an extraordinary week in the news, marked by the official declaration that we're in a recession and have been for a year, the second round of auto hearings on Capitol Hill, unprecedented rate cuts in Europeand a fresh wave of layoffs, culminating in today's jobs report that showed more than half a million jobs were lost in November.
Employers cut 533,000 jobs from nonfarm payrollsin November, the sharpest job loss since December 1974 and much more than the 340,000 decline economists had expected. The unemployment rate rose to 6.7 percent from 6.5 percent.
The prior two months' job losses were revise to show that a total of 199,000 more jobs were lost than previously thought in September and October. That means 1.25 million jobs were lost in the last three months alone, bringing the total to nearly 2 million since the start of the year.
"This is an eye-poppingly bad number," Art Hogan, chief market analyst at Jefferies, told CNBC. "Everybody seems to be coming out and cutting 10-percent of their workforce — at least. ... Does that mean we’re going to see on average for the next six months a job-loss number in the 500s? No. I think we stabilize at some point, probably in the first half of next year where that number is going to start to work its way back to the 200,000-job (loss) range."
Hogan added that the stimulus packages being worked on now, which will get dumped on the Obama administration’s lap on day one, will help make that happen, as opposed to having to wait to see what the administration does in the first 100 days.
Some economists say, while December's jobs report will for sure be bad, the seeds of recovery are already in place.
Meanwhile, more bad news for the housing market: The number of delinquent mortgage loans, which means at least one payment past due, jumped to 6.99 percent in the third quarter from 5.59 percent a year earlier, the Mortgage Bankers Association reported. That was the highest in the history of the MBA survey. The number of mortgages in foreclosure rose to 2.97 percent from 1.69 percent a year ago.
Subprime mortgages were one of the biggest culprits, with 20 percent of those mortgages in delinquency.
Economists said that job losses will only exacerbate mortgage deliquencies and foreclosures in the coming months.
The fate of the Big Three US auto-makers continued to hang in the balance. The CEOs of Ford, General Motors and Chrysler headed back to Capitol Hill to make their plea for a bailout but no one plan seemed to gain traction.
GM and Chrysler have said they would be open to consolidation as a condition of getting the government funds.
Shares of GM slipped 0.7 percent, while Ford climbed 2.3 percent.
Customers of Boeing's 787 Dreamliner faced more delays as the aerospace giant is expected to announce another setback to its latest addition on the back of lengthy strikes and production problems.
Financials were among the day's top gainers as JPMorgan and Bank of America led the Dow with gains of 7.3 percent and 6.3 percent, respectively.
Hartford Financial more than doubled after the company raised its 2008 profit forecast and said it has enough capital to ride out the market.
Dow energy components ExxonMobil and Chevron eked out gains despite the sharp drop in oil prices.
Technology stocks also recovered after earlier declines. Intel , IBM and Dell all gained more than 4 percent. Research In Motion added 6 percent.
On the earnings front, closeout retailer Big Lots reported its profit fell 14 percent to $12.25 million as the pullback in spending took a toll even on the discount retailers. The chain also slashed its earnings forecast for the current quarter, saying it expects same-store sales to slide. The stock shed 1.7 percent.
Other retail stocks joined the rally, with JCPenney and Target finishing up 3.5 percent and 2.7 percent, respectively.
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