NEW YORK — With unemployment still rising, investors are questioning if stocks should be too.
Stocks ended a volatile day Friday little changed after the government reported a spike in the unemployment rate to 9.4 percent in May, the highest level in more than 25 years, even as the pace of layoffs eased more than expected.
The Dow Jones industrial average finished up almost 13 points at 8,763.13, just 14 points below where it started the year. The index had advanced as much as 89 points and moved in and out of positive territory for 2009 during the day, but the jump in the unemployment rate proved to be too tough to ignore.
“When nearly 10 percent of people are out of work, it’s hard for me to say things are so positive,” said Anthony Conroy, head trader for BNY ConvergEx Group.
Bond prices tumbled again, sending long-term yields to their highest levels this year. Those yields are closely tied to interest rates on mortgages and other kinds of consumer loans.
Investors track unemployment closely because jobless people are far more likely to default on their debts and slash their spending.
Despite the troubling jobs data, the Dow and other major stock indexes finished the week higher. Although the Dow is still 38.1 percent below its October 2007 high, it has charged ahead 33.9 percent since hitting a 12-year low in early March.
“The markets are feeling better even though the economy is still sick,” Conroy said.
The Dow rose 12.89, or 0.2 percent, to 8,763.13. The Standard & Poor’s 500 index fell 2.37, or 0.3 percent, to 940.09, and the Nasdaq composite index fell 0.60, or less than 0.1 percent, to 1,849.42.
The Dow was up 3 percent for the week, while the S&P 500 was up 2 percent and the Nasdaq was up 3.7 percent. It was the major indexes’ third straight week of gains.
Bond prices plunged as investors viewed the jobs data as a positive sign for the economy and shifted more funds out of bonds.
Investors tend to load up on bonds, which are considered a safe-haven investment, during times of economic distress, and sell them when signs of recovery emerge.
The yield on the benchmark 10-year Treasury note, a widely used benchmark for interest rates on mortgages and other kinds of loans, jumped to a fresh high for the year of 3.91 percent from 3.71 percent late Thursday. By late Friday, the 10-year note’s yield was 3.84 percent.
“There is pretty good evidence that the recession is bottoming,” said Doug Roberts, chief investment strategist of ChannelCapitalResearch . “The real question is the type of recovery.”
This week, investors will decide whether to extend the market’s advance or cash in profits as they confront data from the Federal Reserve on regional economies, a report on retail sales from the Commerce Department and a reading on consumer sentiment from the University of Michigan.
