February jobs gains seen strong, keeping Fed at bay

WASHINGTON (Reuters) - Employment likely grew solidly for a third straight month in February, a sign the economic recovery is becoming more durable and in less need of further monetary stimulus from the Federal Reserve.

The economy probably created 210,000 jobs last month, according to a Reuters survey, following January's tally of 243,000. The unemployment rate is expected to have held at a three-year low of 8.3 percent.

If the forecasts are accurate, the government's jobs report on Friday would mark the first time since early 2011 that payrolls have grown by more than 200,000 for three months in a row - an outcome that could bolster President Barack Obama's chances of winning re-election.

"The improving labor market is another sign that the recovery is broadening and reduces the urgency for the Fed to act now," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester Pennsylvania.

The Labor Department will release the employment report at 8:30 a.m. (1330 GMT).

Although the job market is gaining some muscle, the pace of improvement remains too slow to do much to absorb the 23.8 million Americans who are either out of work or underemployed.

Fed Chairman Bernanke last week described the labor market as "far from normal" and said continued improvement would require stronger demand for goods and services.

Still, he suggested the outlook would have to deteriorate in order for the central bank to launch another round of bond buying to drive interest rates lower. Officials said in January they expected growth this year to be no higher than 2.7 percent.

The jobs report, which sets the tone for financial markets worldwide, would add to the list of data highlighting the economy's underlying strength.

It would also provide a hopeful sign for the global recovery at a time that growth is slowing in China and the euro zone appears to be sliding into recession. The jobless rate in the 17-nation euro zone area rose to 10.7 percent in January, the highest since the euro started circulating in 2000.

NUMBERS GOOD FOR OBAMA

In contrast, the unemployment rate has dropped 0.8 percentage point since August, providing some relief to Obama, who faces an election battle in which the economy has been taking center stage.

Economists predict the jobless rate could fall below 8 percent by November, even if the recent firming in the jobs market lures Americans who have given up the search for work back into the labor force.

The possibility that discouraged workers resumed the hunt for a job raises the risk that unemployment rose in February.

The labor force participation rate - the percentage of working-age Americans either with a job or looking for one - is near a 29-year low. If it were to rise, it would put upward pressure on the jobless rate.

Employers have added about 1 million jobs since August, according to the government's main payroll survey. The separate survey of households that is used to measure the jobless rate has shown even brisker hiring.

While some parts of the jobs market, such as construction, have benefited from unseasonably warm winter weather, economists say a genuine improvement is under way, even though they expect a slight pull back in March.

Private companies are expected to again account for all the job gains in February, with government employment seen falling for a sixth straight month.

Manufacturing, which in January recorded the largest gain in a year, is expected to dominate job creation in February, reflecting stepped up auto production.

Most auto companies are taking on new workers and adding shifts and overtime to meet pent-up demand after production was disrupted early last year following the tsunami and earthquake in Japan.

With the anticipated job gains in manufacturing, average hourly earnings are expected to have increased 0.2 percent in February after a similar increase in January. The overall work week is expected to hold steady at 34.5 hours.

Earnings will be closely watched for signs of wage inflation after unit labor costs grew much more strongly than initially thought in the third and fourth quarters of 2011.

Outside manufacturing, construction payrolls are expected to show another month of sizeable gains after adding a total of 52,000 jobs in December and January.

Although hiring has quickened, the economy faces persistent long-term unemployment. In January, about 43 percent of the 12.8 million unemployed Americans had been out of work for more than six months.

"We are not yet there in terms of getting everybody back to work, that's going to take a while," said Steve Blitz, chief economist at ITG Investment Research in New York.

(Reporting By Lucia Mutikani; Editing by Leslie Adler)

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Romney gains strength ahead of Super Tuesday

WASHINGTON (Reuters) - Mitt Romney closed in on Rick Santorum in Ohio and picked up a crucial endorsement in Virginia on Sunday as he grows in strength ahead of "Super Tuesday," the biggest day yet in the race for the 2012 Republican presidential nomination.

A Reuters/Ipsos poll found Romney, a former Massachusetts governor, is tied with Santorum at 32 percent support from likely voters in the Ohio Republican primary, the most important of the 10 state nominating contests on Tuesday.

Santorum, a former Pennsylvania senator who is a social conservative with a strong blue-collar message, had been leading in polls in the economically hard-hit Midwestern state by double digits in recent weeks.

Santorum needs an Ohio win to prove he remains a threat to Romney after losing Michigan and Arizona to him last week.

But Romney's five straight victories in Maine, Michigan, Arizona, Wyoming and Washington state have given him a burst of momentum despite some serious reservations about him from conservatives who have flirted with a variety of alternatives.

Senior Romney aide Eric Fehrnstrom was cautious about Romney's prospects in Ohio, saying the campaign was more concerned about getting enough delegates to eventually seal the nomination.

"I don't think any state is a must-win. I think the only must-do on a candidate's checklist is getting 1,144 delegates," he told reporters on Romney's plane.

Adding to his momentum in the race to become the challenger to Democratic President Barack Obama in the November 6 election, Romney picked up the endorsement of Eric Cantor, the conservative No. 2 Republican in the House of Representatives.

Cantor is from the Super Tuesday state of Virginia, where only Romney and libertarian Representative Ron Paul are on the ballot because Santorum and former House Speaker Newt Gingrich failed to meet all the requirements for qualifying.

"He is the guy I believe that will be our nominee and we will have a clear choice as a country as far as the vision forward in growing this economy with Mitt's plan versus that of the president's record," Cantor said on NBC's "Meet the Press."

Republican Senator Tom Coburn of Oklahoma, a fiscal conservative, also endorsed Romney. Oklahoma votes on Tuesday as well and Santorum has been in the lead there.

An NBC News/Marist poll on Sunday gave Santorum support of 34 percent of likely Ohio primary voters while Romney got 32 percent.

Santorum has emphasized his social conservative views on contraception and abortion that arguably have distracted attention from his economic message.

SPLITTING THE CONSERVATIVE VOTE

Speaking on "Fox News Sunday," Santorum suggested the presence of another conservative in the race, Gingrich, was holding him back because it is splitting the conservative vote.

He stopped short of calling on Gingrich to pull out of the Republican nomination race.

Asked about Ohio, Santorum said he would do "very, very well" but did not predict victory.

"It's a tough state for us only because of ... the money disadvantage. But we've got a great grassroots campaign. We're hanging in there," Santorum said.

"It's always harder when you've got two conservative candidates out there running in the race. ... We have the anti-Romney vote, if you will. Both Gingrich and I are out there slugging away. We just need to show that we are the best candidate to go head to head," he said.

Super Tuesday offers something for Romney and all his remaining competitors as they search for a path forward. A rich trove of 419 nominating delegates is available.

Gingrich is placing his hopes on a victory in his home state of Georgia to get him back in the 2012 race. He leads there by double digits.

Gingrich had a brief period as the front-runner but was staggered by a loss to Romney in Florida on January 31 and has been searching for a comeback since then.

"I thought it was vital to the campaign, and we focused on it and as a result despite a lot of money spent against me, we're doing very well and I think we're going to win decisively," Gingrich told CNN's "State of the Union."

(Additional reporting by Will Dunham and Jeff Mason in Washington and Sam Youngman in Georgia; editing by Alistair Bell and Mohammad Zargham)

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Dow breaks 13,000 but can't hold gains

NEW YORK (AP) -- It came and went in a flash each time, a number on a board for mere seconds, but its symbolic power couldn't be dismissed.

The Dow Jones industrial average, powered higher all year by optimism that the economic recovery is finally for real, crossed 13,000 on Tuesday for the first time since May 2008.

The last time the Dow was there, unemployment was 5.4 percent, and Lehman Brothers was a solvent investment bank. Financial crises happened in other countries, or the history books.

The milestone Tuesday came about two hours into the trading day. The Dow was above 13,000 for about 30 seconds, and for slightly longer at about noon and 1:30 p.m., but couldn't hold its gains. It finished up 15.82 points at 12,965.69.

Still, Wall Street took note of the marker.

It was just last summer that the Dow unburdened itself of 2,000 points in three terrifying weeks. Standard & Poor's downgraded the United States' credit rating, Washington was fighting over the federal borrowing limit, and the European debt crisis was raging.

A second recession in the United States was a real fear. But the economy grew faster every quarter last year, and gains in the job market have been impressive, including 243,000 jobs added in January alone.

"Essentially over the last couple of months you've taken the two biggest fears off the table, that Europe is going to melt down and that we're going to have another recession here," said Scott Brown, chief economist for Raymond James.

The tumult of last summer and fall left the Dow as low as 10,655. It closed Tuesday 22 percent above that low. The Dow is 1,199 points from an all-time high, a 9 percent rally from here.

A long-awaited bailout to help Greece prevent a potentially catastrophic default, announced before dawn in Europe after 12 hours of talks, helped the Dow clear 13,000.

Greece will get €130 billion, or about $172 billion, from other European nations and the International Monetary Fund. In a separate deal, investors in Greek bonds will be asked to forgive €107 billion in debt.

After months in which talks crawled along and vague headlines yanked the market up and down, the conclusion was almost anticlimactic because the markets were already expecting an agreement.

European markets didn't take the news as well. Stocks closed down 3.5 percent in Greece, where stocks have lost 80 percent of their value since 2007. Stocks declined less than 1 percent Tuesday in Germany, France and Britain.

Investors noted that Greece remains in a deep recession. Its bond investors will take a 53.5 percent loss on the face value of their bonds, which could discourage future investment.

In the U.S., investors were cheered early by earnings from Home Depot, watched closely as a barometer of American spending on homes, and Macy's. Wal-Mart missed Wall Street expectations, and its stock lost 4 percent, worst among the 30 stocks in the Dow.

The index has climbed steadily this year. It has gained 6 percent and has not lost 100 points on any day. The Greek debt crisis may be receding, but high gasoline prices are emerging as a threat to the economic recovery, and thus the stock market.

A gallon of regular gas costs $3.57 on average, the highest on record for this time of year. With tension building over Iran's nuclear ambitions, Iran has halted oil exports to Britain and France and threatened to stop shipping to other European countries.

The price of oil settled at $106.25, up $2.65 for the day and its highest level since last May. The price jumped more than $1 in about 20 minutes after Iran's foreign ministry spokesman told reporters that a U.N. team visiting Iran has no plans to inspect the country's nuclear facilities and will only hold talks with Iranian officials.

"That was the olive branch the market was holding onto," said Phil Flynn, an analyst for the brokerage PFGBest. "If they're not going to discuss the nuclear program, then we're a lot closer to a conflict than further away," he said.

Airline stocks got clobbered. United Continental lost 9 percent, Delta Air Lines 7 percent. The Dow transportation average lost 1.5 percent.

Materials, telecommunications and energy companies led the industries gaining ground. Health care companies, makers of consumer staples and utilities, traditionally stocks to own in more cautious times, were lower.

The Standard & Poor's 500 index surpassed 1,363, its peak from April 2011, during the day but closed at 1,362.21, up 0.98 point. The Nasdaq composite, which is heavy with technology stocks and trading at levels not seen since December 2000, closed down 3.21 points at 2,948.57.

Metals prices jumped because of expectations that demand may improve after the Greek bailout package was approved and China took another step to stimulate economic growth. Silver finished up 3.7 percent, and platinum, copper and palladium all rose 3 percent or more. Gold ended up 1.9 percent.

The Dow last closed above 13,000 on May 19, 2008. The next day, it crossed under 13,000, not to return for almost four years. It fell as low as 6,547 on March 9, 2009. A reading of 13,094 would double that.

Dan McMahon, director of equity trading at Raymond James, called the 13,000 mark "just a big round number" as a matter of market fundamentals. But he added: "Psychologically, it matters."

The milestone could motivate cautious investors to pump more money back into the stock market. The yield on the government's benchmark 10-year Treasury note rose to 2.06 percent from 2.01 percent Friday, a sign that fewer investors wanted the bonds and were instead willing to buy riskier stocks.

"You need notches along the way to measure things," and Dow 13,000 is as good as any, said John Manley, chief equity strategist for Wells Fargo's funds group. "Is 50 older than 49 and a half? Yes, by six months. Do those six months really make a difference? Probably not. But it does give us a fixed point, something we can look at."

The Dow is also an imperfect measure of the economy's health. It is made up of just 30 companies, and it's weighted so that the few with the highest stock prices carry the most heft.

A small percentage change in the stock of IBM, which is trading around $193, sways the index much more than a large change in the stock of Bank of America, which is trading around $8.

Last year, the Dow rose 5.5 percent. But strip out IBM and McDonald's, the two stocks with the highest prices last year, and it rose just 1.8 percent, according to calculations by Birinyi Associates.

Dow Jones, which decides which 30 companies are the best barometer, says the index can accurately represent the economy because the 30 stocks make up 25 to 30 percent of the market value of all U.S. public companies.

Among the big movers:

— Barnes & Noble fell 4 percent after missing expectations. Rising costs offset higher sales of both traditional books and digital books. The bookstore chain, a survivor in an era that has felled competitors like Borders and Waldenbooks, plans to introduce a cheaper Nook to compete with Amazon's Kindle Fire.

— J.C. Penney, which is trying to reinvent itself and just brought in an Apple veteran as CEO and changed its logo, fell 3 percent after Fitch Ratings dropped its credit grade to junk status.

— High-end department store Saks rose 3 percent after beating analysts' expectations.

___

AP Business Writer Sandy Shore contributed to this report.

View the original article here

Dow breaks 13,000 but can't hold gains

NEW YORK (AP) -- It came and went in a flash each time, a number on a board for mere seconds, but its symbolic power couldn't be dismissed.

The Dow Jones industrial average, powered higher all year by optimism that the economic recovery is finally for real, crossed 13,000 on Tuesday for the first time since May 2008.

The last time the Dow was there, unemployment was 5.4 percent, and Lehman Brothers was a solvent investment bank. Financial crises happened in other countries, or the history books.

The milestone Tuesday came about two hours into the trading day. The Dow was above 13,000 for about 30 seconds, and for slightly longer at about noon and 1:30 p.m., but couldn't hold its gains. It finished up 15.82 points at 12,965.69.

Still, Wall Street took note of the marker.

It was just last summer that the Dow unburdened itself of 2,000 points in three terrifying weeks. Standard & Poor's downgraded the United States' credit rating, Washington was fighting over the federal borrowing limit, and the European debt crisis was raging.

A second recession in the United States was a real fear. But the economy grew faster every quarter last year, and gains in the job market have been impressive, including 243,000 jobs added in January alone.

"Essentially over the last couple of months you've taken the two biggest fears off the table, that Europe is going to melt down and that we're going to have another recession here," said Scott Brown, chief economist for Raymond James.

The tumult of last summer and fall left the Dow as low as 10,655. It closed Tuesday 22 percent above that low. The Dow is 1,199 points from an all-time high, a 9 percent rally from here.

A long-awaited bailout to help Greece prevent a potentially catastrophic default, announced before dawn in Europe after 12 hours of talks, helped the Dow clear 13,000.

Greece will get €130 billion, or about $172 billion, from other European nations and the International Monetary Fund. In a separate deal, investors in Greek bonds will be asked to forgive €107 billion in debt.

After months in which talks crawled along and vague headlines yanked the market up and down, the conclusion was almost anticlimactic because the markets were already expecting an agreement.

European markets didn't take the news as well. Stocks closed down 3.5 percent in Greece, where stocks have lost 80 percent of their value since 2007. Stocks declined less than 1 percent Tuesday in Germany, France and Britain.

Investors noted that Greece remains in a deep recession. Its bond investors will take a 53.5 percent loss on the face value of their bonds, which could discourage future investment.

In the U.S., investors were cheered early by earnings from Home Depot, watched closely as a barometer of American spending on homes, and Macy's. Wal-Mart missed Wall Street expectations, and its stock lost 4 percent, worst among the 30 stocks in the Dow.

The index has climbed steadily this year. It has gained 6 percent and has not lost 100 points on any day. The Greek debt crisis may be receding, but high gasoline prices are emerging as a threat to the economic recovery, and thus the stock market.

A gallon of regular gas costs $3.57 on average, the highest on record for this time of year. With tension building over Iran's nuclear ambitions, Iran has halted oil exports to Britain and France and threatened to stop shipping to other European countries.

The price of oil settled at $106.25, up $2.65 for the day and its highest level since last May. The price jumped more than $1 in about 20 minutes after Iran's foreign ministry spokesman told reporters that a U.N. team visiting Iran has no plans to inspect the country's nuclear facilities and will only hold talks with Iranian officials.

"That was the olive branch the market was holding onto," said Phil Flynn, an analyst for the brokerage PFGBest. "If they're not going to discuss the nuclear program, then we're a lot closer to a conflict than further away," he said.

Airline stocks got clobbered. United Continental lost 9 percent, Delta Air Lines 7 percent. The Dow transportation average lost 1.5 percent.

Materials, telecommunications and energy companies led the industries gaining ground. Health care companies, makers of consumer staples and utilities, traditionally stocks to own in more cautious times, were lower.

The Standard & Poor's 500 index surpassed 1,363, its peak from April 2011, during the day but closed at 1,362.21, up 0.98 point. The Nasdaq composite, which is heavy with technology stocks and trading at levels not seen since December 2000, closed down 3.21 points at 2,948.57.

Metals prices jumped because of expectations that demand may improve after the Greek bailout package was approved and China took another step to stimulate economic growth. Silver finished up 3.7 percent, and platinum, copper and palladium all rose 3 percent or more. Gold ended up 1.9 percent.

The Dow last closed above 13,000 on May 19, 2008. The next day, it crossed under 13,000, not to return for almost four years. It fell as low as 6,547 on March 9, 2009. A reading of 13,094 would double that.

Dan McMahon, director of equity trading at Raymond James, called the 13,000 mark "just a big round number" as a matter of market fundamentals. But he added: "Psychologically, it matters."

The milestone could motivate cautious investors to pump more money back into the stock market. The yield on the government's benchmark 10-year Treasury note rose to 2.06 percent from 2.01 percent Friday, a sign that fewer investors wanted the bonds and were instead willing to buy riskier stocks.

"You need notches along the way to measure things," and Dow 13,000 is as good as any, said John Manley, chief equity strategist for Wells Fargo's funds group. "Is 50 older than 49 and a half? Yes, by six months. Do those six months really make a difference? Probably not. But it does give us a fixed point, something we can look at."

The Dow is also an imperfect measure of the economy's health. It is made up of just 30 companies, and it's weighted so that the few with the highest stock prices carry the most heft.

A small percentage change in the stock of IBM, which is trading around $193, sways the index much more than a large change in the stock of Bank of America, which is trading around $8.

Last year, the Dow rose 5.5 percent. But strip out IBM and McDonald's, the two stocks with the highest prices last year, and it rose just 1.8 percent, according to calculations by Birinyi Associates.

Dow Jones, which decides which 30 companies are the best barometer, says the index can accurately represent the economy because the 30 stocks make up 25 to 30 percent of the market value of all U.S. public companies.

Among the big movers:

— Barnes & Noble fell 4 percent after missing expectations. Rising costs offset higher sales of both traditional books and digital books. The bookstore chain, a survivor in an era that has felled competitors like Borders and Waldenbooks, plans to introduce a cheaper Nook to compete with Amazon's Kindle Fire.

— J.C. Penney, which is trying to reinvent itself and just brought in an Apple veteran as CEO and changed its logo, fell 3 percent after Fitch Ratings dropped its credit grade to junk status.

— High-end department store Saks rose 3 percent after beating analysts' expectations.

___

AP Business Writer Sandy Shore contributed to this report.

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