US STOCKS-Wall St climbs on strong jobs data

Fri Jul 5, 2013 1:26pm EDT

* June job creation exceeds forecasts

* Markets gyrate in light post-holiday volume

* Investors worry about Fed cutting stimulus back in September

* Dow up 0.6 pct, S&P 500 up 0.6 pct, Nasdaq up 0.6 pct

By Alison Griswold

NEW YORK, July 5 (Reuters) - U.S. stocks rose in a choppy session on Friday after robust jobs data pointed to a strengthening economy, even as it raised the odds that the Federal Reserve will begin to cut its stimulus measures as soon as September.

Sectors tied to the pace of economic growth and an improved lending outlook advanced, including small-cap shares and banks, giving credence to the idea that investors were viewing the strong payroll figures positively. The S&P 500 financial sector index gained 1.2 percent.

Employers added 195,000 jobs in June, exceeding expectations of 165,000, and job growth in previous months was revised higher.

"The jobs report this morning is a sign that the economy is growing and the private sector is hiring, and that bodes well for growth-oriented industries," said Janna Sampson, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

"The stock market is responding appropriately in that I think that it's a sign that we should anticipate decent growth in GDP in the second half as we get more people back to work."

Bank of America Corp rose 1.9 percent to $13.07 while Citigroup Inc gained 1.3 percent to $48.28. Large banks benefit when interest rates rise because higher rates increase their net interest margin.

Interest rates rose sharply on Friday in anticipation that the Fed will start cutting its monthly $85 billion in bond buying, which was a major factor in the stock market's rally this year, as early as September.

The Dow Jones industrial average was up 93.53 points, or 0.62 percent, at 15,082.08. The Standard & Poor's 500 Index was up 9.33 points, or 0.58 percent, at 1,624.74. The Nasdaq Composite Index was up 20.68 points, or 0.60 percent, at 3,464.35.

Volume was light, with many traders still away from the office after the Fourth of July holiday. About 2.5 billion shares had changed hands on U.S. exchanges as of 12:30 p.m. (1630 GMT), lighter than average, and activity was expected to taper off in the afternoon.

The S&P 500 was trading around its 50-day moving average of 1,625.61 in early afternoon trading. The last time the S&P 500 closed above its 50-day moving average - a measure of the market's medium-term trend - was on June 19.

The S&P 500 remained 2.7 percent below its May 21 record closing high of 1,669.16.

In Friday's session, the S&P Small-Cap 600 Index gained 0.8 percent.

Annaly Capital Management, a real estate investment trust that invests in mortgage-backed securities, slid 6.1 percent to $11.39 as the yield on the benchmark 10-year U.S. Treasury note jumped above 2.7 percent. Annaly Capital was the fourth most-traded stock on the New York Stock Exchange.

Gold tumbled 3 percent, extending earlier losses as the dollar gained strength. Newmont Mining was the S&P 500's worst performer, falling 5.8 percent to $27.34.

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