Strong Jobs Report Helps Extend Blue Chips’ Upturn

Blue-chip stocks rallied Friday to wrap up their second straight winning week as traders took heart in the latest evidence of a thriving U.S. labor market.

Wall Street’s gains were modest, with the Dow Jones industrial average rising 46 points, but the rally extended the recent upturn in the wake of a four-week slump.

“The market has regained its footing,” said Dick Green, president of investing website Briefing.com in Chicago. “Earnings and the economy are booming, and that’s what is driving the stock market once again.”

Labor Department data showed that nonfarm payrolls grew by a better-than-expected 248,000 jobs in May. Analysts said rosier sales guidance from semiconductor giant Intel and a decline in oil prices contributed to investor optimism.

In addition, some analysts pointed to last month’s 32,000 new hires in manufacturing as a harbinger of continued job growth.

The Dow index rose 46.91 points, or 0.5%, to 10,242.82. The broader Standard & Poor’s 500 index climbed 5.86 points, or 0.5%, to 1,122.50, for its 11th winning session in the last 13.

The technology-dominated Nasdaq composite index rallied more strongly on the day, adding 18.36 points, or 0.9%, to 1,978.62, but it finished the holiday-shortened week with a loss of 0.4%.

For the week, the Dow rose 0.5% and the S&P; 500 added 0.2%.

Friday’s winning session was fueled in part by Intel’s outlook, issued after trading ended Thursday, that raised the low end of its revenue target for the second quarter to $8 billion from $7.6 billion and reaffirmed the high end at $8.2 billion. Intel’s shares gained 73 cents to $28.14.

In the Treasury market, the yield on the benchmark 10-year T-note rose to 4.77% from 4.71% on Thursday. Oil prices declined for a third straight day, to $38.49 a barrel, in New York trading.

The strong jobs numbers left little doubt on Wall Street that the Federal Reserve, which meets at the end of the month, would launch a series of interest rate hikes to keep the economy from overheating.

Green, however, said “the market has priced most of that in” already. What’s more, tighter credit has not always hurt the stock market, strategists said.

Steve Todd, editor of Todd Market Forecast newsletter in Mission Viejo, noted that the market held its ground the last two times the Fed approved a series of rate hikes.

In 1999-2000, even as the Fed took its key short-term rate to 6.5% from 5%, the S&P; 500 index gained 6.8%. In 1994-95, when the federal funds rate was lifted to 6% from 3.5%, the S&P; 500 stayed around 470.

Still, reaction to the jobs report was not universally bullish.

“While superficially May’s numbers appear strong, they nevertheless represent a significant decline from the pace of the prior two months,” Peter D. Schiff, president of Newport Beach brokerage Euro Pacific Capital, wrote in a note to clients. Many of the gains occurred in areas linked to real estate and mortgage refinancing -- trends that will be unsustainable in a climate of higher interest rates, Schiff contended.

Among Friday’s market highlights:

* Kmart Holding surged $7.67 to $62.53 after agreeing to sell as many as 24 stores to Home Depot, which eased 15 cents to $35.33.

* Mandalay Resort Group jumped $5.65 to $60.27 after the casino company handily topped Wall Street’s first-quarter earnings estimates.

* Analyst downgrades clipped some stocks: Bed Bath & Beyond sank 94 cents to $36.28 on a revision by Jefferies & Co., and perfume maker Elizabeth Arden slid $2.03 to $19.38 after a rating cut at CL King & Associates.

* Maytag slid $2.01 to $24.28 after warning that profit for the current quarter and year would be disappointing.

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Market Roundup, C4