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Stock market surge continues

Stocks jumped for the fourth session in a row today, a trend that economists believe will continue.
S.P. Kothari, accounting professor at the University of Rochester’s William E. Simon Graduate School of Business Administration, agrees with other economists that a modest rise in unemployment and job growth in line with expectations is responsible for the stock-market rebound.
“It should continue to grow modestly as time goes on,” Kothari said, “unless we learn something different, which would be surprising.”
At 1 p.m., the Dow Jones Industrial Average was up 72.50 points to 5,667.25, a rise of 1.3 percent. It closed up more than 85 points. The Dow has jumped more than 225 points since Monday, and has recovered more than half of its losses suffered in July.
Kothari pointed to Labor Department figures showing that the unemployment rate was 5.4 percent in July, creating 193,000 jobs, as a contributing factor. A Reuters report said analysts were expecting 207,000 jobs created.
Because of the slightly higher unemployment rate, Kothari said he believes inflation will remain steady at roughly 2 percent. That is good news because some economists had become convinced the Federal Reserve would raise interest rates at its August meeting to ward off inflation.
Kothari also said earnings reports of companies were strong. He agreed with other economists that fears of higher interest rates and concern over corporate earnings contributed to the recent selloff of stocks.
Ray Ball, the Wesray professor of business administration at the Simon School, said he believes all these factors have helped contribute to a lower long-term interest rate–6.83 percent on Thursday–which in turn fueled the stock market.
“The share index is very sensitive to long-term rates,” he said.
Interest-rate sensitive stocks such as banks were up at midday. Chase Manhattan Bank N.A. jumped 2 7/8 to 74, and Citicorp jumped 3 3/4 to 87.
The turnaround this week also was evident among technology stocks, which again rose more sharply than blue-chip issues.
The Standard & Poor’s 500-Stock Index added 12.47 points to 662.49, and the American Stock Exchange index gained 4.85 to 548.97.

Stock market surge continues

Stocks jumped for the fourth session in a row today, a trend that economists believe will continue.
S.P. Kothari, accounting professor at the University of Rochester’s William E. Simon Graduate School of Business Administration, agrees with other economists that a modest rise in unemployment and job growth in line with expectations is responsible for the stock-market rebound.

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