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US stocks extend gains to 5 days after jobs report

INVESTORS poured money into stocks for a fifth day after a drop in weekly unemployment claims and a spike in oil raised hopes for the economy. Falling interest rates on Treasury securities also fed demand for stocks.

The Dow Jones industrial average rose 80 points yesterday to its highest close since October. The index is up 347 points in five days, its longest winning streak since last fall.

The gains have come even as analysts say the market is overdue for a retreat. The latest push higher followed the Labor Department's report that jobless claims fell more than expected to 550,000 last week. A jump in oil lifted energy companies and an upbeat forecast from consumer products maker Procter & Gamble Co. added to enthusiasm about an economic recovery.

Bond prices surged after a US$12 billion auction of 30-year Treasury notes drew strong demand.

Momentum grew in midafternoon as Treasury Secretary Timothy Geithner told a Congressional panel that confidence and stability were returning to the economy after the panic that began a year ago.

Some pieces of bad news held back certain shares but didn't get in the way of a broad market advance. Agricultural company Monsanto Co. warned that its 2009 earnings would come in at the low end of its forecast and said it would cut more jobs than previously announced.

Investors voiced concerns about the pace of the gains but few wanted to stand in the way of a market that was carving its way higher. The Standard & Poor's 500 index has risen 54.3 percent since hitting a 12-year low in March. It is sitting at an 11-month high, though it's still down 33.3 percent from its peak in October 2007.

David Bianco, chief U.S. equity strategist at Banc of America Securities-Merrill Lynch in New York, said the rally has merit because stocks had tumbled so far since their peak. The S&P 500 index was 56.8 percent by early March.

"This is a rally that's supported by the fundamentals," he said. "Maybe it's moving a little bit too fast for the normal rules of thumb but we haven't seen a crash like that since the Great Depression."

The Dow rose 80.26, or 0.8 percent, to 9,627.48 to its highest close since Oct. 6, when it ended at 9,956. The index is up 3.7 percent in five days.

The broader S&P 500 index rose 10.77, or 1 percent, to 1,044.14, its first five-day climb since a streak that ended Nov. 28.

The Nasdaq composite index rose 23.63, or 1.2 percent, to 2,084.02.

The yield on the benchmark 10-year Treasury note fell to 3.36 percent from 3.48 percent late Wednesday. The yield on the 30-year bond fell to 4.20 percent from 4.33 percent.

Investors made selective bets on companies following a mixed batch of corporate forecasts. P&G rose US$2.28, or 4.2 percent, to US$56.04, while Monsanto fell US$4.18, or 5 percent, to US$79.30.

Ralph Fogel, co-chief investment officer at Fogel Neale Partners in New York, argues that too many analysts are now expecting a pullback for it to actually happen. He pointed to a well-tested piece of Wall Street wisdom that if a certain prediction becomes too widely expected in the marketplace, that conclusion is often wrong.

"I'm not sure why sure this market is going to slow up so much," Fogel said. "We look for a nice continued move upward."

Some analysts remain cautious. Subodh Kumar, global investment strategist at Subodh Kumar & Associates in Toronto, contends that the market has gone too far without a break.

"The fact that it got here without any meaningful corrections means it hasn't stopped since March to test the validity of its assumptions," he said.

Three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 813.5 million shares compared with 875.3 million at the same point Wednesday.

The Russell 2000 index of smaller companies rose 8.50, or 1.5 percent, to 594.90.


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