Equities took the high road and finished in positive
territory last week. Stock prices advanced on economic data that, for the most
part, suggested the domestic economy continues to expand, if modestly.

Russia-U.S. saber rattling over Syria sent shares
sharply downward Friday morning, but didn’t derail the rally. Economic figures
released during the week were mild enough to convince investors that the
Federal Reserve’s expected tapering of its monthly bond buying will be modest.

The
Dow Jones Industrial Average picked up 0.8%, or 112 points, to finish at
14,922.50, snapping a four-week losing streak. The S&P 500 gained 22
points, to 1655.17. The tech-heavy Nasdaq Composite rose 2%, or 70, to 3660.

The Labor Department said Friday that August nonfarm
payrolls had increased by a lower-than-expected 169,000. The unemployment rate
inched down to 7.3% from 7.4%, but that came on a drop in the participation
rate. It’s not particularly indicative of a robust labor market, and it’s
likely the last piece of important data that will be considered at the Fed’s
Sept. 17-18 Open Market Committee meeting.

Some expect a tapering to be announced, but the
weaker jobs report could mean that any tapering will be modest. The soft jobs
market could convince the Fed to delay or minimize cuts in its bond-buying
splurge, which has kept interest rates low and aided the equity bull market.

Friday morning, the market “went like someone
going from New York City to Newark by way of Miami,” says John Wilson, a
principal at a market commentary Website. Investors initially welcomed the jobs
news, but stocks quickly plunged on headlines saying that Russia was sending
warships to the eastern Mediterranean near Syria. But before noon, stocks had
recovered all the lost ground. Wilson says he’s heartened by the market’s
behavior, and he notes that breadth is still strong, with the percentage of
NYSE stocks above their 200-day moving average never dropping below 65% during
the recent retreat from the August highs.

While Friday’s jobs news wasn’t particularly
exciting, on balance last week’s figures were consistent with an expanding
economy. Particularly encouraging: the latest numbers on jobless benefits,
private payrolls, and car sales.

Even though bond yields have risen to around 3%,
fixed-income securities still aren’t an attractive alternative to stocks,
Wilson adds, particularly when many expect yields to go higher still, which
would push down bond prices.  Chris Zook,
chief investment officer of CAZ Investments, concurs on bonds. The question, he
adds, is whether the economy is strong enough to withstand a less accommodative
stance from the Fed (Source:  Barrons Online).