Jobs Drop, Stocks Pop

Jobs Drop, Stocks Pop

Steve Schaefer, 12.05.08, 04:30 PM EST

November's brutal decline in U.S. payrolls shook investors at the open, but the day ended with a pre-holiday party.

Wall Street seemed to want to rally on Friday, and after a rocky start it managed to coast into the weekend. New York's exchanges were jittery at the open, but a midday turnaround erased losses and set the stage for investors to push higher in the final hour of trading.

The updraft came despite some pretty grim news. Before trading began, the U.S. Labor Department said nonfarm payrolls shed 533,000 jobs in November, the steepest decline in 34 years, and unemployment climbed to 6.7%, but any negative reaction may have been built into Thursday's final-hour sell-off. By day's end, the major averages locked in comfortable gains, with the Dow Jones industrial average recovering from an earlier fall of 257 points. (See "U.S. Layoffs Surge In November.")

At the closing bell the Dow was up 259 points, or 3.1%, to 8,635; the S&P 500 gained 31 points, or 3.7%, to 876; and the Nasdaq added 64 points, or 4.4%, to 1,509. With the gains, the Dow cut its loss for the week to 2.2%, and is now down 34.9% on the year. The S&P fell 2.2% over the past five sessions, and is down 40.3% on the year, while the Nasdaq had a 1.8% weekly drop, pushing the index to a 43.1% 2008 loss..

By the end of the session only a handful of Dow components were still in the red. General Motors (nyse: GM - news - people ) posted a loss, as Chief Executive Rick Wagoner joined Alan Mulally of Ford Motor (nyse: F - news - people ) and Robert Nardelli of Chrysler in Washington to continue their push for a $34.0 billion loan package for Detroit's auto industry.

GM announced it will lay off 2,000 workers and cut shifts at several plants in the first quarter of 2009, while Chrysler confirmed it had retained bankruptcy firm Jones-Day to review the company's options. Shares of GM were down 2.2%; while Ford was up 0.4%. Chrysler is privately held.

Financial stocks were among the day's winners and none more so than the Hartford Financial Services Group (nyse: HIG - news - people ). The diversified financial firm halved its 2008 earnings guidance in October, but bumped that forecast by 40 cents, to between $4.70 and $4.90 a share, on Friday. Investors cheered the more upbeat outlook, shooting shares 106.8% higher.

Bond traders were on a seesaw as the stock market reversed, and yields on Treasury securities crept higher in afternoon trading. After falling early in the session the two-year note yield was up to 0.94%, from 0.85% Thursday, while the 10-year note returned 2.67%, from 2.57%.