Stocks post weekly gains after volatile day

MarketWatchSeptember 7, 2013 

NEW YORK -- U.S. stocks finished little changed Friday, but with the Dow Jones industrial average halting a four-week losing streak, as Wall Street's attention shifted from developments related to Syria to the impact of the jobs report on U.S. monetary policy.

Halting its longest winning streak since the middle of July, the Dow ended the session off 14.98 points, or 0.1 percent, at 14,922.50. That was 0.8 percent higher than last Friday's close.

"We've got Syria, the G-20, so we've got a lot going on. I think you saw money go off the table ahead of the jobs report," said Chris Gaffney, senior investment strategist at EverBank Wealth Management.

Reports indicating intensified rhetoric between Russia and the United States on Syria's use of chemical gas sent stocks skidding in early trade.

Stock losses were gradually erased as President Barack Obama reiterated that the U.S. response would be "limited and proportional" to the attack in suburban Damascus last month that killed more than 1,400, including at least 400 children. Obama spoke from St. Petersburg, where he attended the G-20 summit.

"The market is getting more comfortable with Syria," given the political assurances that any strike will be strategic with no American forces on the ground, Gaffney said. He added: "We could see a spike in oil prices and gold heading up on worries there, and a selloff in emerging markets and people going into Treasuries."

Tallying a weekly gain of 1.4 percent, the Standard & Poor's 500 index held steady at 1,655.17. The Nasdaq composite climbed 1.23 points to 3,660.01, leaving it 2 percent ahead for the week.

Stock-index futures had extended their gains, setting up stocks for a higher open, after a disappointing payrolls report shifted expectations of when the Federal Reserve could start to reduce its bond buys.

Ahead of the open, the Labor Department reported the economy added 169,000 jobs in August, short of forecasts, while cutting the estimate for July. The unemployment rate fell to 7.3 percent from 7.4 percent as fewer people looked for work.

Investors now think there's a "chance that the Fed does not pull money off the table in the next meeting," Gaffney said. "Most of the market believed it was going to be a $10 billion cut in the bond-buying efforts later this month. I think investors still think that, but are starting to hedge their bets."

While the market generally holds the view that the Federal Open Market Committee would begin curbing its monetary support at its next gathering on Sept. 17-18, Gaffney believes there's a good possibility such a move would not come until December.

Fed Bank of Chicago President Charles Evans on Friday said the central bank should not cut back on its $85 billion in monthly asset purchases until economic growth and inflation pick up speed.

Later in the session, Kansas City Fed President Esther George suggested the central bank could slow its bond-purchase program to $70 billion.

"Considering (George) is the most outspoken critic of quantitative easing, we have to assume then that the overall dovish Fed may only cut by $10 billion," Peter Boockvar, chief market strategist at the Lindsey Group, said in emailed commentary.

Reduced expectations of an imminent cut to the Fed's bond purchases also prompted big reversals in other markets. Gold shed early losses to rise $13.50, or 1 percent, to $1,386.50 an ounce.

After rising above 3 percent overnight, the yield on the 10-year Treasury note fell to 2.93 percent as Treasurys rallied.

Oil prices rose $2.16, or 2 percent, to $110.53 a barrel on the New York Mercantile Exchange.

Among movers, ETrade Financial Corp. rallied 4.6 percent after Goldman Sachs upgraded its shares to buy from neutral, with analysts anticipating the brokerage would benefit as interest rates rise.

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