NEW YORK (CNN/Money) -
Stocks rallied Friday on news that the economy added jobs in September for the first time in eight months, capping another week of solid gains for the market.
The Nasdaq composite (up 44.35 to 1880.57, Charts) jumped 2.4 percent while the Dow Jones industrial average (up 84.51 to 9572.31, Charts) and the Standard & Poor's 500 (up 9.61 to 1029.85, Charts) each rose about 0.9 percent.
All three indexes ended the week higher -- the sixth winning week out of the past eight. The Nasdaq scored the heftiest gains for the week, jumping 4.9 percent, while the Dow rose 2.8 percent and the S&P tacked on 3.3 percent.
"Everyone's worry on the economy was jobs," said Adam Tracy, director of listed trading at Thomas Weisel Partners. "Today's report was unexpected by most people and it allayed fears as to whether this is going to be a jobless recovery."
Unexpected news early in the session that the economy created 57,000 jobs in September -- the first month of job growth since January -- lured a flood of buyers into the market, though some later cashed in some profits ahead of the weekend. A positive report on the services sector and some individual corporate news also helped stocks.
Next week investors could chose to focus on the eagerly anticipated quarterly earnings reports of some heavyweights, kicking off October's busy reporting period. Next week is set to bring fiscal results from Dow components Alcoa (AA: up $1.02 to $28.15, Research, Estimates) and General Electric (GE: up $0.07 to $30.82, Research, Estimates), as well as Pepsi (PEP: up $0.29 to $47.20, Research, Estimates) and Yahoo! (YHOO: up $1.33 to $39.24, Research, Estimates).
Meanwhile, more economic reports are likely to garner attention, though the week is light on important data. Reports on consumer credit, wholesale inventories, import and export prices, trade balance and producer prices, a measure of inflation, were all on the calendar.
Jobs report surprises
The Labor Department said early Friday that employers had added 57,000 jobs to their payrolls in September after losing a revised 41,000 jobs in August. The reading surpassed Wall Street's expectations for a loss of 30,000 jobs, according to Reuters Research. The unemployment rate held steady at 6.1 percent, which also was better than forecasts for a rise to 6.2 percent.
"It was a pleasant surprise, what happened with the jobs report," said Peter Green, market analyst at MKMPartners. "People were relieved -- the change in non-farm payrolls was the standout."
The optimistic report came a day after investors mulled news that jobless claims had jumped more than expected last week. Traders said there was a sense of relief Friday among investors, who have been gripped with growing concerns that the U.S. economic recovery could be a jobless one as they watched other sectors show improvement in recent months, leaving the labor market behind.
Friday's secondary economic report -- the Supply Management Institute's reading on the services sector in September -- also added to the positive sentiment in the market. The index dipped to 63.3 from 65.1 in August, a decline that was slightly smaller than economists' expectations. It also was well above the benchmark level of 50 that signals expansion in the sector.
The reports gave investors renewed optimism about the levels of recovery in corporate earnings as they looked ahead to a slew of third-quarter profit reports due in the next few weeks. As the pre-announcement period winds down with little in the way of surprises, traders said the next big challenge for the market will come when some of the tech heavyweights, including Intel and IBM, report results, starting the week of Oct. 12.
The movers
Tech companies surged across the board Friday. Intel (INTC: up $0.99 to $29.61, Research, Estimates), a Dow component, jumped 3.5 percent, while others in the chip sector also put up big numbers. Advanced Micro Devices (AMD: up $0.20 to $11.89, Research, Estimates) jumped 1.7 percent and KLA-Tencor (KLAC: up $3.35 to $55.98, Research, Estimates) added 6.4 percent. The Philadelphia Semiconductor Index soared 4.5 percent.
Hewlett Packard (HPQ: up $0.78 to $20.30, Research, Estimates), another of the Dow's tech components, rose 4 percent. HP's rise was aided by news that it offered customers of competitor Sun Microsystems (SUNW: up $0.11 to $3.31, Research, Estimates) $25,000 in free services to switch to HP computers that run Linux. Despite the reports, Sun jumped 3.4 percent.
Siebel Systems (SEBL: up $0.45 to $11.00, Research, Estimates) spiked 4.3 percent after the company said late Thursday it expects third-quarter revenue to come in at the lower end of its previous forecast, but also noted that its profit would meet analysts' estimates. Smith Barney raised its rating on the company to "buy" from "hold."
Another Dow component, 3M (MMM: up $1.75 to $73.03, Research, Estimates), gained 2.5 percent after Lehman Brothers upgraded the conglomerate to "overweight" from "equal-weight," raised its price target to $85 from $70, and upped its 2004 earnings estimates following the company's analyst meeting.
Meanwhile, shares of some job placement services companies jumped after the better-than-expected jobs report. Among the gainers: online job search company Monster Worldwide (MNST: up $2.61 to $28.50, Research, Estimates) surged 10.1 percent.
Market breadth was decisively positive. On the New York Stock Exchange, where 1.5 billion shares traded, gainers outnumbered losers by more than two to one. On the Nasdaq, advancing stocks also beat decliners by more than two to one on volume of 2 billion shares.
Treasury prices tumbled after the jobs report, with the 10-year sinking 1-22/32 points to yield 4.20 percent from 3.99 percent late Thursday. The dollar gained ground against the euro and was little changed versus the yen.
NYMEX light sweet crude oil futures rose 56 cents to $30.40 a barrel. COMEX gold tumbled $13.70 cents to $370 an ounce.
European markets rose in late-day trading there. Asian stocks ended mostly higher.
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