Wall Street climbs on surprise drop in jobless rate

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Published October 05, 2012

| Reuters

Stocks rose on Friday, with the S&P 500 up for a fifth straight day and set to close at its highest since 2007, after government data showed a surprise drop in the unemployment rate.

Labor Department data showed the jobless rate dropped by 0.3 percentage point in September to 7.8 percent, its lowest since January 2009, even as Americans came back into the labor force to resume the hunt for work.

A 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.

"This is a strong report any way you slice it. In the financial markets, some people will question the validity of this number so close to the presidential election."

The unemployment rate is a key focus in the U.S. presidential election, and Friday's data could be a boon to President Barack Obama's reelection bid.

The Dow Jones industrial average rose 62.98 points, or 0.46 percent, to 13,638.34. The S&P 500 Index gained 8.15 points, or 0.56 percent, to 1,469.55. The Nasdaq Composite added 16.36 points, or 0.52 percent, to 3,165.81.

Zynga shares plummeted 20.4 percent to $2.24 after it slashed its 2012 outlook for a second time, fanning doubts about its ability to shore up its dwindling earnings. Facebook , which derives more than a tenth of its revenue from fees paid by Zynga, saw its shares fall 1.7 percent to $21.57.

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.

(Additional reporting by Richard Leong; Editing by Bernadette Baum)

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