Fears eased during the week that the nation's major financial institutions would collapse or at least require additional government lifelines to stay alive. Market veterans were quick to rein in hopes that stocks would chart an easy recovery but many still saw the four straight days of gains a good sign.
"The overriding question people have is 'Is this rally it?'" said Quincy Krosby, chief investment strategist at The Hartford. "For that to happen I think we need to see more evidence of a turnaround. We still have significant problems in terms of unemployment. The problems with the banks are still there."
On Friday, the Dow Jones industrial average rose 53.92, or 0.8 percent, to 7,223.98. The Dow hasn't put up four straight gains since late November.
The Standard & Poor's 500 index rose 5.81, or 0.8 percent, to 756.55. The Nasdaq composite index rose 5.40, or 0.4 percent, to 1,431.50.
For the week, the Dow jumped 9 percent, the S&P 500 index added 10.7 percent and the Nasdaq rose 10.6 percent. It was the best week for the major indexes since the week ended Nov. 28.
Still, the Dow and the S&P 500 index remain down by about half from their peak in October 2007.
The Dow Jones Wilshire 5000 index, which reflects nearly all stocks traded in America, jumped 10.7 percent for the week. That's a paper gain of about $900 billion.
The turnaround began Tuesday as the head of Citigroup Inc. said the bank had managed to turn a profit in the first two months of the year. That helped ease worries about bad debt that have cloaked financial stocks since the collapse of Lehman Brothers in September.
Traders who last week pounded Citi shares to be low $1 began buying the stock again. The gains in the beaten-down industry were enormous: Citi surged 73 percent for the week, Bank of America Corp. jumped 83 percent and Wells Fargo & Co. rose 62 percent.
Traders are often reluctant to hold on to large positions ahead of the weekend out of fears that bad news could be on the way. Many on Wall Street looked to a weekend packed with events that could have a great affect on trading next week.
Finance ministers and central bankers from the Group of 20 countries were meeting Friday and Saturday outside London, and Federal Reserve Chairman Ben Bernanke was set to discuss the financial crisis in a rare interview to be broadcast on CBS' "60 Minutes" Sunday.
Energy stocks dragged on the market Friday ahead of a weekend OPEC meeting on whether the cartel should adjust oil production. Health stocks rose after Schering-Plough Corp. reported positive trial results for an anti-clotting drug. Merck, which said at the start of the week it planned to acquire Schering-Plough, jumped $3.04, or 12.7 percent, to $27.07.
Financial stocks mostly rose Friday following reports that Citigroup Inc. Chairman Richard Parsons said the bank doesn't need additional government support. Citigroup has received three rounds of emergency funding.
Bank of America Corp. and JPMorgan Chase & Co. also said this week that they have been profitable so far this year. The market has been quick to embrace the encouraging signs about the financial system after weeks of unrelenting selling spurred on by concerns that the government's efforts to break a freeze in lending weren't working.
Investors also grew more confident about the prospects for the economy during the week.
A government report on retail sales for February wasn't as bad as many analysts had feared. Word also arrived that an accounting board may recommend an easing of financial reporting rules of tough-to-sell assets. Banks say a change in so-called "mark-to-market" accounting rules would help their bottom lines.
Officials in Washington also said they would consider reinstating a rule that makes it harder to place bets a stock will fall. Some analysts blame so-called short selling with fanning the volatility in the market, particularly the financial stocks.
Analysts said technical factors that helped drive the market for the week continued Friday, including short-covering, when traders buy stock to cover their short-sale trades.
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Despite the glimmers of hope, analysts are still a long way away from declaring that the worst is over.
"We are going to remain cautious because the slightest bit of bad news could turn this thing around," said Joe Arnold, investment adviser at Dawson Wealth Management.
But some unease can be good for the market, Krosby said.
She noted that doubt about the rally and the more incremental gains Wednesday and Friday actually increase the chances it could hold some of its advance.
"Oddly enough, the more skepticism about the duration of the rally the better it is because it's telling you there are still buyers on the side."
Upbeat reports from companies in a range of industries lifted the market after stocks finished at their lowest levels in more than a decade on Monday. General Motors Corp. said Thursday it wouldn't need the latest installment of government bailout money, and a cut in General Electric Co.'s credit rating on the same day wasn't as bad as some had feared.
On Friday, Citigroup rose 11 cents, or 6.6 percent, to $1.78, while Bank of America fell 9 cents, or 1.5 percent, to $5.76. Wells Fargo slipped 1 cent to $13.94.
General Motors extended its gains on Friday, jumping 54 cents, or 24.8 percent, to $22.72. For the week, GM rose 88 percent.
More than 2 stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume came to 6.65 billion shares compared with 7.2 billion shares traded Thursday.
Bonds were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.90 percent from 2.86 percent late Thursday. The yield on the three-month T-bill fell to 0.20 percent from 0.22 percent Thursday.
The dollar fell against other most other major currencies, while gold prices rose.
Light, sweet crude for April delivery fell 78 cents to settle at $46.25 a barrel on the New York Mercantile Exchange.
Overseas, Britain's FTSE 100 rose 1.1 percent, Germany's DAX index slipped 0.7 percent, and France's CAC-40 rose 0.4 percent. Japan's Nikkei stock average jumped 5.2 percent.
The Dow Jones industrial average closed the week up 597.04, or 9 percent, at 7,223.98. The Standard & Poor's 500 index rose 73.17, or 10.7 percent, to 756.55. The Nasdaq composite index rose 5.40, or 0.4 percent, closing at 1,431.50.
The Russell 2000 index, which tracks the performance of small company stocks, rose 42.04, or 12 percent, to 393.09.
The Dow Jones Wilshire 5000 Composite Index - a free-float weighted index that measures 5,000 U.S. based companies
- ended at 7,675.94, up 740.56, or 10.7 percent, for the week. A year ago, the index was at 13,266.85.
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
Press; By SARA LEPRO and TIM PARADIS]
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