Market report

Utilities push S&P to record close

NEW YORK -- A surge in dividend-rich utility stocks helped push the Standard & Poor's 500 index close to a record Friday.

The S&P 500 index rose 10.06 points to 2,007.7, surpassing its previous record close of 2,003.37, set Aug. 29. The index has now logged 33 all-time highs this year.

The Dow Jones industrial average gained 67.78 points, or 0.4 percent, to 17,137.36. The Nasdaq composite gained 20.61 points, or 0.5 percent, to 4,582.90.

Investors bought up the stocks after the government reported that U.S. employers added fewer jobs than forecast for August. That drove demand for bonds and pushed down their yields. In turn, stocks with big dividends became more attractive to investors seeking income-paying securities.

The stock market also got a lift from a cease-fire agreement between Ukraine and Russian-backed separatists, aimed at bringing an end to nearly five months of fighting. Stocks had slumped at the beginning of August amid worries that the conflict in Ukraine would spiral out of control and inflame tensions between Russia and the West.

"That development is a positive," said Jerry Braakman, chief investment officer of First American Trust. "Further sanctions on Russia, and excluding them from the Western economies, sets global trade back."

Stocks had started the day lower after the disappointing jobs report.

U.S. employers added 142,000 jobs in August, snapping a six-month streak of hiring above 200,000 and posting the smallest gain in eight months, the Labor Department said Friday. The unemployment rate fell to 6.1 percent from 6.2 percent, falling because more people without jobs stopped looking for one and were no longer counted as unemployed. Economists had expected employers to add 220,000 jobs.

Many analysts reasoned that, while the report was disappointing, the slowdown in the pace of hiring was not strong enough to suggest that the overall trend had changed. Friday's news was also at odds with reports earlier this week that showed the economy is strengthening. Construction and the service industry, for example, were strong.

"I would avoid reading too much into one number," said Russ Koesterich, chief investment strategist at BlackRock. "This is an outlier ... the weight of evidence suggests that the U.S. is going to have a decent third quarter and will be relatively strong going into the end of the year."

Bond prices initially rose on the disappointing hiring news. The yield on the 10-year Treasury note, which moves in the opposite direction of price, dropped as low as 2.41 percent, before gradually giving up most of its gains throughout the day and edging up to 2.46 percent from 2.45 percent on Thursday. The yield has slumped from 3 percent at the start of this year.

The early drop in bond yields increased demand for utility stocks. The lower bond yields are, the more attractive dividend-rich utilities appear to investors who are looking for an income. The slump in bond yields this year has helped make the utilities sector the second-best performer in the S&P 500 index, with a gain of 14 percent.

The price of oil fell further after slumping Thursday, when a report showed that U.S. crude supplies fell less than expected. Benchmark crude oil closed down $1.16, or 1.2 percent, to $93.29 a barrel in New York after falling $1.09 on Thursday.

Business on 09/06/2014

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