Positive US jobs report entices buyers back

US stocks rallied at midday yesterday after a positive weekly jobs report enticed buyers back into the market for some post-Christmas shopping for stocks.

Around 11.30am ET, the Dow Jones industrial average, up 86.45 to 8534.56, the Nasdaq composite, up 14.10 to 1386.57 and the Standard & Poor's 500 index, up 8.10 to 900.57, all rose more than 1%.

The latest update on the labour market showed a significant decline in the number of people filing for unemployment benefits over the past week. Jobless claims for the week that ended December 21 dropped an adjusted 60,000 to 378,000 from 438,000 in the previous week.

But the closely followed four-week average of first-time jobless benefits applications edged up 2,500 to 404,500.

Despite the day's run-up, some market watchers said the belated "Santa Claus" rally, if it holds until New Year's Eve, would likely be too little, too late to prevent another year of stock losses.

With four trading sessions left in 2002, stocks are set for their first three-year decline since 1941. Excluding yesterday's rally, the Dow is off 15.2%, the Nasdaq off 29.1% and the S&P 500 off 21.8% for the year.

"Trading volume this week was light and we had a choppy market," Barry Hyman, an independent markets strategist said.

"The problem with high volatility is that it takes away from year-end gains and the so-called January effect bounce. We didn't have one in 2001 or 2002. A lot of the gamesmanship that occurs at the end of the year is traders and investors looking to start off the new year on a good note on the back of a year-end rally. But that looks difficult."

Among the sectors leading the advance were chip and wireless stocks. Goldman Sachs raised its rating on two Japanese chip production equipment makers, saying it expects an increase in capital spending from Asian chipmakers such as South Korea's Samsung Electronics. Goldman's bullish outlook appeared to boost shares of Intel up $0.36 to $17.14, Applied Materials up $0.17 to $14.04, and KLA-Tencor up $0.51 to $37.82. Philip Morris, up $0.42 to $41.90, was one of the Dow gainers.

Market breadth was positive on very light volume. On the New York Stock Exchange advancers led decliners more than 2 to 1 as 228 million shares were traded. On the Nasdaq,

advancers beat decliners 4 to 3 as 287 million shares changed hands.