NEW YORK (CNN/Money) -
U.S. stocks rallied Friday in a bounce off recent declines and on bets that the strong, but lower-than-forecast January payrolls number means that the Federal Reserve will hold rates steady for some time.
The Nasdaq composite (up 44.45 to 2064.01, Charts) rose 2.2 percent, the Standard & Poor's 500 (up 14.17 to 1142.76, Charts) index gained 1.25 percent, while the Dow Jones industrial average (up 97.48 to 10593.03, Charts) gained around 0.9 percent.
Treasury bond prices rallied, pushing the yields lower, while the dollar continued its slide versus other major currencies.
For the week, the Dow rose 1 percent, after falling for the last two. The S&P 500 gained just over 1 percent, after falling or closing flat for the last two weeks. The Nasdaq closed 0.1 percent lower on the week, posting its third weekly decline.
Investors initially seemed to make a knee-jerk reaction to the payrolls number, leaving stocks mixed at the open. But as the session unfolded, the assessment of the report became more positive.
Employers added 112,000 new jobs last month, fewer than the 165,000 jobs economists surveyed by Briefing.com were expecting. The January figure was an increase from the upwardly revised 16,000 new jobs created in December. The unemployment rate dropped to 5.6 percent in January from 5.7 percent in December; economists expected it to hold steady.
"In retrospect, the number is what Wall Street wanted," said Robert Long, vice president of investments at Melhado, Flynn & Associates. "It's strong enough to suggest the labor market is starting to improve, but it's not so strong as to create worries that the Federal Reserve will need to raise interest rates sooner rather than later."
Long said the rally also needed to be taken in context, considering that the major indexes have lost virtually all the ground they had gained this year. As such, Long said investors were more eager to push stocks forward.
The major indexes had predominately rallied for the eight weeks prior to that, including pretty substantial gains in early January, but had drifted for the last two weeks.
Monday's one economic report is the December read on wholesale inventories, forecast to show a rise of 0.3 percent in December after rising 0.5 percent in November. However, it is not likely a very market-moving report. Of more interest will be reports due later in the week on retail sales and consumer sentiment.
Earnings due Monday include Hasbro (HAS: up $0.62 to $20.69, Research, Estimates) before the bell. Already, 78 percent of the Standard & Poor’s 500 have reported fourth-quarter earnings, with results looking to rise around 28 percent from a year earlier.
Investors will also look to see what comes out of the G7 meeting of the world's seven strongest economies that started Friday in Boca Raton, Fla.
"The G7 meeting is probably going to be pretty contentious," said Paul Mendelsohn, chief investment strategist at Windham Financial Services. "It remains to be seen if anything comes out of it that would influence the dollar on Monday."
On the move
Among the stock movers, the telecom sector was strong. Shares of Ericsson (ERICY: up $3.07 to $26.77, Research, Estimates) rallied more than 12 percent after reporting much higher-than-forecast earnings that grew from a year earlier. The surge spilled over into sector mate Nokia (NOK: up $0.80 to $21.27, Research, Estimates), which also rose 3.9 percent.
The report also helped some networkers, with Cisco Systems (CSCO: up $0.92 to $24.74, Research, Estimates) adding 3.8 percent.
Of the 30 components that make up the Dow industrials, 24 posted gains. Among the big gainers, Intel (INTC: up $0.96 to $30.88, Research, Estimates) added 3.2 percent, Caterpillar (CAT: up $2.18 to $78.50, Research, Estimates) added 2.8 percent, while Citigroup (C: up $1.20 to $49.31, Research, Estimates) and AT&T (T: up $0.47 to $19.47, Research, Estimates) both gained around 2.5 percent.
Shares of McDonald's (MCD: up $0.46 to $27.16, Research, Estimates) also helped the Dow, rising 1.7 percent after the fast-food behemoth said sales at stores open a year or more rose 13.4 percent in January.
On the downside, shares of technology services provider EDS (EDS: down $1.39 to $21.90, Research, Estimates) fell 6 percent after the company reported a quarterly net loss after charges late Thursday. Excluding the charges, the company posted a profit that edged past analysts' estimates. Friday morning, brokerages SG Cowen and UBS downgraded EDS stock.
Market breadth was positive. Advancers beat decliners by more than three to one on the New York Stock Exchange, where nearly 1.45 billion shares traded. Winners beat losers by almost three to one on the Nasdaq, where 1.84 billion shares changed hands.
Treasury prices rallied, with the ten-year note adding 22/32 of a point in price, pushing its yield down to 4.08 percent.
The dollar fell after the jobs report. Its continuing weakness is expected to be one of the main topics at the G7 meeting.
Light crude oil futures fell 60 cents to settle at $32.48 a barrel. COMEX gold rallied $5.40 to settle at $404.20 an ounce.
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