Stocks gain as traders take jobs report in stride

NEW YORK — Investors took a disappointing December jobs report in stride Friday and focused on signs that the overall employment picture is stabilizing.

Stocks zigzagged for much of the day but ended higher after the Labor Department said employers added jobs in November but cut 85,000 jobs in December, far more than the 8,000 analysts had expected. The gain for November marked the first increase in nearly two years.

The Dow Jones industrial average tacked on 11 points, while broader indicators logged bigger gains. All the major indexes posted strong advances for the week.

The monthly jobs report is considered an important indicator of the economy's health. However, improvement in the job market has been lagging as other parts of the economy improve, such as manufacturing, housing and retail sales.

The jobs report reminded investors that the recovery is likely to continue to proceed in fits and starts. Figures from the previous two months were revised to show that the economy generated 4,000 jobs in November. But the revisions showed a loss of 16,000 more jobs than previously estimated in October.

"I don't think that anyone should expect a flip of a switch," said Linda Duessel, equity market strategist at Federated Investors.

The report also signals that many people are giving up on their search for work. The unemployment rate was unchanged at 10 percent.

A year ago, when the economy was still reeling from paralyzed credit markets and the collapse of several large banks, the Dow Jones industrial average fell 143 points on news that the unemployment rate had climbed more than expected to 7.2 percent during December 2008. Employers cut 524,000 jobs that month.

Analysts were divided on whether the report is a sign unemployment will continue to move higher.

Peter Cardillo, chief market economist at the brokerage Avalon Partners Inc. in New York, said the unemployment number was disappointing, but didn't change the trend. He noted many of the job losses were in the construction industry, which is likely due to seasonal slowdowns.

"It was a disappointment, but I think we're on the right track. I think unemployment will begin to show growth very shortly," he said.

According to preliminary calculations, the Dow rose 11.33, or 0.1 percent, to 10,618.19. The Standard & Poor's 500 index rose 3.29, or 0.3 percent, to 1,144.98, its fifth straight advance. The Nasdaq composite index rose 17.12, or 0.7 percent, to 2,317.17.