US STOCKS-Wall St rises on Fed hopes, agriculture sector

                                

 * Weak jobs data taken as a positive for stocks
 * Blue-chip Dow ends above 11,000 for first time since May 34
 * Agricultural shares rallies on USDA corn crop forecast
 * Dow up 0.5 pct, S&P up 0.6 pct, Nasdaq up 0.8 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
 (Updates to close)
                                
 By Leah Schnurr
                                
 NEW YORK, Oct 8 (Reuters) - The Dow closed above the 11,000
mark for the first time in five months on Friday as a
surprisingly weak jobs report strengthened the case for more
stimulus from the Federal Reserve.
                                
 While a loss of 95,000 jobs normally might be expected to
hurt stocks, the market's desire for cheap money trumped
concerns about the slow economy.
                                
 "It was almost as if the market was cheering for a bad
report to try to solidify that the Fed would engage in
quantitative easing," said Scott Marcouiller, chief technical
market strategist at Wells Fargo Advisors in St. Louis.
                                
 Agriculture-related shares surged in sync with U.S. corn
and soybean futures after the U.S. Department of Agriculture
said the corn crop is likely to be far smaller than expected.
Dow component Caterpillar rose 2.1 percent to $80.37. For
details, see [ID:nN08236238]
                                
 A construction and farm machinery sector index <.15GSPMCHD>
rose 2.6 percent on the belief U.S. grain farmers will use some
of their profits from higher crop prices to buy new tractors
and harvesting equipment.
                                
 Deere & Co <DE.N> shares climbed 4.8 percent to $75.35 and
Agco Corp <AGCO.N> jumped 3.6 percent to $40.63.
                                
 Stocks have rallied in recent weeks on expectations of
further government stimulus, but earnings season will take
center stage next week. Corporate results and guidance could
provide confirmation for the gains or suggest investors were
blindly chasing performance.
                                
 Expectations of more quantitative easing could also keep
the U.S. dollar on a downtrend, which in turn signals more
gains for Wall Street. An inverse correlation between the
greenback and U.S. stocks has prevailed in the last three
months.
                                
 The Dow Jones industrial average <.DJI> gained 57.90
points, or 0.53 percent, to close at 11,006.48. The Standard &
Poor's 500 Index <.SPX> rose 7.09 points, or 0.61 percent, to
1,165.15. The Nasdaq Composite Index <.IXIC> climbed 18.24
points, or 0.77 percent, to 2,401.91.
                                
 It was the first time the Dow closed above 11,000 since May
3.
                                
 For the week, the Dow and the S&P 500 each rose 1.6
percent, while the Nasdaq gained 1.3 percent.
                                
 Consumer discretionary companies got a boost after hedge
fund manager William Ackman took large stakes in shares of
retailer JC Penney Co Inc <JCP.N> and consumer goods
manufacturer Fortune Brands Inc <FO.N>. JC Penney rose 2.7
percent to $32.49, while Fortune jumped 7.4 percent to $55.85.
[ID:nN08198493]
                                
 Alcoa Inc <AA.N> marked the unofficial start to earnings
season, rising 5.7 percent to $12.89 a day after its results
beat estimates and increased its outlook for global aluminum
demand.
                                
 Data showed the economy shed jobs in September for a fourth
straight month as government payrolls fell and private hiring
slowed. Although initially taken as a negative, investors
ultimately viewed the gain of 64,000 private-sector jobs as the
economic cloud's silver lining, analysts said. For details, see
[ID:nN08205203].
                                
 The expectation of further stimulus was also weighed
against comments from St. Louis Fed President James Bullard,
who said the Fed faces a difficult decision at next month's
policy meeting on whether to offer further stimulus to a U.S.
economy that is still growing but only slowly. [ID:nN08199744]
                                
 "I think he said it's not in the bag that we're going to do
this," Marcouiller said.
                                
 As the drop in the government's non-farm payrolls report
increased the likelihood of more quantitative easing by the
Fed, the dollar weakened while commodity prices rose.
                                
 The Reuters Jefferies CRB index <.CRB>, which covers 19
mostly U.S.-traded commodities, rose 2.7 percent.
                                
 Freeport-McMoRan Copper & Gold Inc <FCX.N> gained 4.5
percent to $95.51, while the S&P Materials index <.GSPM> shot
up 2 percent.
                                
 Options traders also remained confident about the market as
the volatility index continued to slide. The CBOE Volatility
index <.VIX>, Wall Street's favorite fear gauge, fell 3.9
percent to 20.71, the lowest since May.