* Zynga shares slide after warning, Facebook slips
* Sprint could counterbid on PCS -sources
* Investors eye Q3 earnings next week
* Indexes up: Dow 0.4 pct, S&P 0.3 pct, Nasdaq flat
By Edward Krudy
NEW YORK, Oct 5 The Dow Jones industrial average
climbed to its highest level in nearly 5 years on Friday after
an unexpected drop in the unemployment rate pointed to an
The S&P 500 rose for a fifth day and was also on course to
close near a five-year high. The index has gained nearly 17
percent so far this year and is on track for its best yearly run
since 2009 when stocks rebounded after the financial crisis.
But the indexes were off their highs of the day in afternoon
trading, suggesting the market may struggle to make further
progress with third-quarter earnings season starting next week.
Labor Department data showed the jobless rate dropped by 0.3
percentage point in September to 7.8 percent, its lowest since
January 2009. Investors focused on a survey of households that
pointed to a big surge in hiring.
"What this suggests at the end of the day is that demand in
the United States will hold up reasonably well," said Kevin
Caron, market strategist at Stifel, Nicolaus & Co in Florham
Park, New Jersey.
And with hiring still well below full recovery levels the
employment data also leaves the door open to more stimulus from
the Federal Reserve. "It wasn't so strong that it upset the
apple cart for those that are looking for additional easing by
the central banks," said Caron.
The Dow Jones industrial average gained 55.87 points,
or 0.41 percent, to 13,631.23. The Standard & Poor's 500 Index
gained 4.52 points, or 0.31 percent, to 1,465.92. The
Nasdaq Composite Index gained 1.18 points, or 0.04
percent, to 3,150.64.
Much of the market's gains this year have been due to easy
monetary policies. The improvement in U.S. hiring last month is
one bright spot as manufacturing around the world has been
showing signs of softness in recent months.
A separate survey of business establishments showed
employers added 114,000 jobs to their payrolls last month while
data for July and August was revised to show 86,000 more jobs
created than previously reported.
"The household employment jumped up strongly. That's an
important move. These are not government jobs. It's an
impressive number," said Robbert van Batenburg, head of global
research at Louis Capital Markets in New York.
Zynga shares plummeted 19.1 percent to $2.27 after
it slashed its 2012 outlook for a second time, fanning doubts
about the games maker's ability to shore up its dwindling
Facebook, which derives more than a tenth of its
revenue from fees paid by Zynga, saw its shares fall 2.5 percent
Investors turn their attention to the start of the
third-quarter earnings season next week. S&P 500 earnings are
expeceted to drop more than 2 percent in the quarter compared
with a year earlier, according to Thomson Reuters data. The
decline would be the first since 2009.
Alcoa Inc kicks off earnings on Tuesday and is
expected to show zero earnings per share compared to 15 cents a
year ago. The shares rose 0.2 percent to $9.09 on Friday.
Sprint Nextel is considering making a rival bid for
MetroPCS Communications, which agreed Wednesday to a
merger with Deutsche Telekom's T-Mobile USA,
according to people familiar with the situation.
Sprint Nextel rose 3 percent to $5.25, while MetroPCS gained
1.2 percent to $12.84.