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Jobs cool, Wall St. hot
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July 7, 2000: 5:11 p.m. ET
Wall St. cheers a slowing jobs market as sign the Fed may be done
By Staff Writer Jake Ulick
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NEW YORK (CNNfn) - The Nasdaq composite index closed above 4,000 for the first time in more than two weeks Friday, wiping out most of its losses for the year, after weaker-than-expected economic data lifted hopes that borrowing costs won't go higher in August.
The nation's employers added a scant 11,000 jobs to the world's largest economy in June, the government said, in the latest sign the Federal Reserve might not need to raise interest rates next month.
That news sent all the major U.S. stock indexes rising as investors bet that corporate profitability, which often moves inversely to the cost of borrowing, can now grind higher.
 Alan Hoffman, stock market strategist at Value Line Asset Management, called the report further confirmation that the economy, in a record expansion, is cooling.
"That should be great for interest rates and good for stocks," Hoffman told CNNfn's Talking Stocks.
The Nasdaq composite index surged 62.63 points, or 1.6 percent, to 4,023.20, its first close above 4,000 since June 21. The gains, 1.4 percent on the week, put the gauge only 46 points below the 4,069 mark it closed on at the end of last year.
"There was less job creation and that's got everyone excited," said Peter Coolidge, senior trader at Brean Murray & Co. "It's quite something that, in spite of the earnings warnings earlier this week, we're seeing this kind of strength in the Nasdaq."
The Dow Jones industrial average, meanwhile, gained 154.51 points, or 1.5 percent, to 10,635.98, rising 1.8 percent on the week. The S&P 500 rose 22.23, or 1.5 percent, to 1,479.13, becoming the only major U.S. stock index to gain value year-to-date. The S&P finished 1999 at 1,469 and is up 1.6 percent on the week.
The Dow, off 7.5 percent this year, and Nasdaq, down 1 percent in 2000, have been hurt recently by companies announcing profit warnings. A telling time in the markets begins next week when companies begin posting actual financial results for the April through June quarter. Dow members Alcoa, J.P. Morgan and General Electric all report earnings results for the second quarter in the days ahead. On the Nasdaq, Yahoo! posts its results next week.
 Grace Fey, portfolio manager at Frontier Capital Management, told CNN's In the Money that the markets will know focus on whether the Fed's rate hike campaign will crimp profitability. (425K WAV) (425K AIFF)
More stocks rose than fell Friday. Advancing issues on the New York Stock Exchange beat declining ones 1,815 to 1,086, as trading volume reached 931 million shares. Nasdaq winners topped losers 2,088 to 1,832, as more than 1.4 billion shares changed hands.
In other markets, Treasury securities rose. The dollar fell against the euro but gained versus the yen.
Wall St. cheers Main St.'s loss
In the week's most anticipated economic report, the economy added 11,000 jobs last month, well below the 260,000 Wall Street expected. The unemployment rate fell to 4 percent from 4.1 percent. Average hourly earnings, rose by 5 cents, or 0.4 percent, to $13.71 an hour. Both figures matched analysts' forecasts and point to a tight labor market where companies have to raise wages to retain an ever-smaller pool of available workers.
But analysts focused on the payroll figure. Though a negative for workers on Main Street, the small job gains gave Wall Street hope that the economy is slowing under the weight of six Federal Reserve rate hikes since June 1999.
"We had some real good numbers this morning," said Charles Payne, head analyst at Wall Street Strategies.
 Investors Friday bet that tighter credit, which can make it tougher for companies to improve profitability, may be nearing a peak.
"There's a 50 percent chance the Fed is finished and (June's job number) puts the odds up a notch," Robert Robbins, chief investment strategist at Robinson-Humphrey, told CNNfn's Before Hours.
But when it comes to job creation, Merrill Lynch may not be showing up in next month's numbers. The Wall Street Journal said the nation's largest brokerage is considering cutting up to 2,000 jobs, or 3 percent of its work force. Merrill (MER: Research, Estimates) fell 7/8 to 123-1/8.
Gains moderate
The major indexes were lifted by gains to its biggest movers. On the Nasdaq, Microsoft (MSFT: Research, Estimates) jumped 1-1/16 to 82 and Sun Microsystems (SUNW: Research, Estimates) rose 2-9/16 to 90-1/16.
On the Dow, Hewlett-Packard (HWP: Research, Estimates) gained 6-3/8 124-3/4 and Home Depot (HD: Research, Estimates) surged 4 to 55-1/4.
But despite the day's strength, the major indexes ended the week only slightly higher, repeating a pattern seen over the last month. Analysts say the market may not see appreciable gains until Wall Street knows exactly if interest rates will go higher and what effect that will have on corporate profitability. 
But for one company, the profit picture just became clear. Vertex Pharmaceuticals (VRTX: Research, Estimates) rose 5-3/8 to 123-7/16 after the drug developer late Thursday said it expects to earn between 40 cents and 50 cents per share in the second quarter, versus expectations for a loss.
Scholastic (SCHL: Research, Estimates), the U.S. publisher of the Harry Potter books, rose 1/2 to 63-1/4. A record 3.8 million-copy first printing of the fourth in the series of children's fantasy novels is set for release Saturday.
Amazon.com (AMZN: Research, Estimates), which pre-sold more than 338,000 copies of "Harry Potter and the Goblet of Fire," gained 3/16 to 36-1/4.
Among other Internet companies, Yahoo! (YHOO: Research, Estimates) tumbled 5-7/8 to 116-1/2 after Deutsche Bank Alex. Brown downgraded the leading Internet portal to "buy" from "strong buy."
In other Nasdaq losers, Qualcomm (QCOM: Research, Estimates) fell 5-1/16 to 56-5/8. South Korea's three major mobile telephone operators indicated Friday they will not use Qualcomm Inc.'s wireless technology. 
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