At midday: Stimulus hopes support S&P 500, TSX

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North American stocks were mixed in midday trading on Friday, after a disappointing reading on U.S. employment raised concerns about the economy but also stoked the belief that the Federal Reserve could be planning to give the economy a boost with another round of stimulus.

At noon, the Dow Jones industrial average was down 9 points or less than 0.1 per cent, to 13,283. The broader S&P 500 was up 3 points or 0.2 per cent, to 1435. In Canada, the S&P/TSX composite index was up 82 points or 0.7 per cent, to 12,222.

The moves follow a strong rally on Thursday, which came after the European Central Bank announced a plan to buy unlimited quantities of government bonds from financially distressed euro zone countries. The S&P 500 hit its highest closing level in four-and-a-half years.

On Friday, the economic news was downbeat – but nonetheless fed into speculation that the U.S. Federal Reserve could be moving toward a stimulus announcement of its own, perhaps as early as next week. The stimulus could take the form of extending its commitment to keeping its key rate at exceptionally low levels, or it could involve outright bond-buying using a strategy known as quantitative easing.

The U.S. Labor Department reported that employers added just 96,000 jobs in August, which was well below the 130,000 new jobs that economists had been expecting. While the unemployment rate fell to 8.1 per cent from 8.3 per cent, economists noted that the decrease was due to people giving up on looking for work.

Commodity producers were the big winners, as gold jumped higher: It was recently spotted at $1,739 (U.S.) an ounce, up $33. Crude oil rose 6 cents, to $95.59 a barrel.

Within the S&P 500, materials stocks rose 1.6 per cent and energy stocks rose 1.5 per cent. Defensive stocks lagged, with telecoms down 1.1 per cent, consumer staples down 0.8 per cent and utilities down 0.5 per cent.

Within Canada's benchmark index, materials rose 2.8 per cent and energy stocks rose 0.8 per cent. Financials were relatively flat and telecom stocks fell 1 per cent.

In Europe, the U.K.'s FTSE 100 rose 0.3 per cent and Germany's DAX index rose 0.7 per cent.