US STOCKS-Wall St on track for weekly gain after jobs report

Fri Jun 7, 2013 11:03am EDT

* Hiring points to economy still in need of Fed's help

* Nonfarm payrolls up 175,000 in May; jobless rate 7.6 pct

* TiVo shares tumble after $490 mln settlement with Motorola Mobility, others

* Indexes up: Dow 1.1 pct, S&P 1 pct, Nasdaq 0.8 pct

By Angela Moon

NEW YORK, June 7 (Reuters) - U.S. stocks rose on Friday, setting the Dow and the S&P 500 indexes on track for a weekly gain, after a jobs report suggested the economy still needs the Federal Reserve's support, soothing some concerns that the Fed might end its stimulus efforts sooner than expected.

The U.S. nonfarm payrolls report showed moderate growth in the labor market in May, but not enough forward momentum to suggest that the Fed will put the brakes on its bond-buying program in the near future.

The S&P 500 has advanced about 15 percent so far this year, partly on the belief the Fed's stimulus would remain in place.

But for the past few weeks, investors had gotten increasingly concerned about the longevity of the Fed's stimulus and over a still-sluggish global economy. Market volatility shot up with the S&P 500 rising and falling more than 1 percent in both directions in a single trading session on some days.

The Labor Department said 175,000 jobs were added in May, just above the median forecast of economists in a Reuters poll, while the unemployment rate ticked up slightly to 7.6 percent, with the increase giving a relatively hopeful sign as it was driven by more workers entering the labor force.

"From the equity market perspective it's (nonfarm payrolls numbers) just about in that sweet spot where it's strong enough that you're not really worried about the economy," but "it's not so strong you now start to worry about the Fed getting more aggressive in the taper," said Russ Koesterich, global chief investment strategist at BlackRock in a media call.

"It should help equity markets quiet down a little bit in the near term."

Ahead of the release of the jobs report on Friday, former Fed Chairman Alan Greenspan said on CNBC a gradual withdrawal of economic stimulus was "adequate, but we have to get moving."

The Dow Jones industrial average was up 163.03 points, or 1.08 percent, at 15,203.65. The Standard & Poor's 500 Index was up 15.35 points, or 0.95 percent, at 1,637.91. The Nasdaq Composite Index was up 26.80 points, or 0.78 percent, at 3,450.85.

Equities seemed to be cheering the near-term impact of the jobs report after trading lower for most of the week on worries the Fed may reduce its stimulus. While stocks rallied, the Treasury market showed a contrasting move with debt prices falling on revived bets the Fed might pare bond purchases later this year.

For the week, the S&P 500 was up 0.5 percent, the Dow was up 0.6 percent while the Nasdaq was off 0.1 percent.

Gains were broad, with cyclical sectors like industrials and energy stocks among the top gainers. S&P industrial sector index was up 1.5 percent while the energy sector index rose 1 percent.

According to Koesterich, with the market eventually getting ready to anticipate some change in real rates, defensive names like utilities will come under pressure as they have benefited the most from the unusual monetary accommodation.

"In an environment where things are beginning to normalize, I think the allocation is to avoid overpaying for some of those defensive names and have a broader allocation and particularly with a little bit more of a tilt to the cyclical," he said.

In company news, video recorder pioneer TiVo Inc said it would receive $490 million after settling a patent lawsuit with Google Inc's Motorola Mobility, Cisco Systems Inc and Time Warner Cable Inc, days before the case was to go to trial. TiVo shares fell 17.5 percent to $11.31.

Wal-Mart Stores Inc said on Friday its board had approved a new $15 billion stock repurchase program, the first in two years. The stock, up 1.3 percent at $76.62, was among the top gainers on the Dow index.

George Soros's firm, Soros Fund Management, which manages $24 billion of the investor's cash, sold much of its Japanese stock position in May, before the recent, steep selloff, according to a person close to the matter.