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 The reports on employment and the pace of orders at factories offered the market fresh evidence that the economy might not be in as worrisome a state as many had feared. But a surprise quarterly loss from Sun Microsystems Inc. weighed on the tech-laden Nasdaq composite index.
Still, buyers outnumbered sellers after a government report showed the nation's employers cut far fewer jobs than expected last month, stirring optimism about the buoyancy of the economy.
Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams, said stocks pulled back from the day's highs because many investors opted to hold on to gains following a decent run-up, including a 190-point surge in the Dow Jones industrials on Thursday.
"This is just normal profit-taking," he said, adding: "Sun Microsystem's earnings today didn't help the cause."
The employment report Friday came at the end of a critical week for Wall Street. While corporate results dominated in previous weeks, investors focused this week on the Federal Reserve's decision Wednesday to lower interest rates and on reports on the nation's gross domestic product, personal spending and factory orders.
The Fed's decision to lower the benchmark fed funds rate by a quarter point to 2 percent and widespread speculation that it will stand pat at future meetings boosted investors' confidence. The Fed's comments helped shore up an anemic dollar and calmed some fears about inflation.
On Friday, the Dow Jones industrial average rose 48.20, or 0.37 percent, to 13,058.20 after being up more than 100 points early in the session.
Broader stock indicators ended mixed. The Standard & Poor's 500 index rose 4.56, or 0.32 percent, to 1,413.90, while the Nasdaq slipped 3.72, or 0.15 percent, to 2,476.99.
The moves Friday came a day after a rising dollar and falling oil prices emerged as promising signs for the economy. The Dow closed above 13,000 for the first time since Jan. 3.
For the week, the Dow gained 1.29 percent, while the S&P 500 added 1.15 percent and the Nasdaq rose 2.23 percent. It was the third straight weekly advance for the Dow and the S&P 500.
Richard Sparks, a senior equity analyst at Schaeffer's Investment Research, noted that on Thursday and Friday the S&P 500 closed over the 1,400 mark for the first time since January.
"If we're able to continue above it, or if the S&P 500 is able to hold onto that level, that's going to be a big positive for the market," he said.
"We've had several good weeks running here so it doesn't surprise me at all to see a little bit of a sell-off," he said of Friday's session.
Bond prices declined Friday as some investors moved into stocks from the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.86 percent from 3.77 percent late Thursday.
Light, sweet crude rose $3.80 to settle at $116.32 per barrel on the New York Mercantile Exchange. The dollar was mixed against other major currencies, while gold prices rose.
Recent months have brought spikes in food and energy costs that have made it harder for many consumers. Wall Street is concerned that rising prices and a weak housing market would force consumers, who account for about 70 percent of U.S. economic activity, to curtail spending.
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 But with oil prices pulling back sharply Thursday, stocks took off, and they continued their run into Friday's session before the rally stalled. Rovelli said investors apparently felt the recent run-up had occurred too quickly.
"The environment is not that great," he said, referring to energy prices that remain elevated even off their highest levels. "We're overbought. We were overdue for some profit-taking."
The Labor Department's report that employers cut 20,000 jobs in April was a relief to Wall Street, which had been expecting payrolls to fall by 75,000 jobs. The unemployment rate fell to 5 percent from 5.1 percent. This marked the fourth straight month of job losses, but the data signaled that perhaps the economy might be resisting falling into recession.
A separate report showing that factory orders increased in March following two months of declines added to an upbeat mood. The Commerce Department said U.S. manufacturers saw orders increase 1.4 percent in March. Economists expected a 0.2 percent increase after declines in January and February.
Sun Microsystems fell $3.69, or 23 percent, to $12.64 after the company stunned investors late Thursday by reporting a loss for the third quarter. The server and software maker blamed the loss on sagging sales to U.S. companies focused on consumers, which Sun said are delaying big-ticket spending.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 3.86 billion shares compared with 4.32 billion shares traded Thursday.
Overseas, Japan's Nikkei stock average rose 2.05 percent. Britain's FTSE 100 finished up 2.11 percent, Germany's DAX index added 1.36 percent, and France's CAC-40 rose 1.46 percent.
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The Dow Jones industrial average ended the week up 166.34, or 1.29 percent, at 13,058.20. The Standard & Poor's 500 index finished up 16.06, or 1.15 percent, at 1,413.90. The Nasdaq composite index ended the week up 54.06, or 2.23 percent, at 2,476.99.
The Russell 2000 index finished the week up 3.86, or 0.53 percent, at 725.74.
The Dow Jones Wilshire 5000 Composite Index - a free-float weighted index that measures 5,000 U.S. based companies
- ended Friday at 14,251.06, up 161.85 points, or 1.15 percent, for the week. A year ago, the index was at 15,102.16.
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On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
[Associated Press; By TIM PARADIS]
Copyright 2008 The Associated Press. All rights reserved. This
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