NEW YORK (CNN/Money) -
Stocks were mixed Friday after a strong April payrolls report cooled some worries about a slowing economy, but also revived fears about inflation and rising interest rates.
For the week, the major gauges managed solid gains, due to strength early in the week. The Dow rose 1.5 percent, the S&P 500 rose 1.3 percent and the Nasdaq rose 2.4 percent.
The Dow Jones industrial average (up 5.02 to 10,345.40, Charts) and the broader Standard & Poor's 500 (down 1.28 to 1,171.35, Charts) index both ended little changed Friday, pulling back from modest gains earlier in the session.
The Nasdaq composite (up 5.55 to 1,967.35, Charts) rose about 0.3 percent.
Treasury prices slumped, sending yields higher, and the dollar gained versus other major currencies.
"The payroll numbers were extraordinarily supportive for the economy," said Barry Hyman, equity strategist at Ehrenkrantz King Nussbaum. "But counter to that, the report brings back the Fed and inflationary prospects, and that's why you see just a modest up day."
Employers added 274,000 jobs to U.S. payrolls in April, nearly 100,000 above the 175,000 consensus of economists surveyed by Briefing.com. In addition, March's figure was revised up to 146,000 from the original 110,000 and February's figure was revised up to 300,000 from the 243,000 initial read.
The unemployment rate, generated by a separate survey, held steady at 5.2 percent in the month, as had been expected.
"I thought it was a very favorable number for both Wall Street and Main Street, particularly paired with the upward revisions to the previous two months," said Stuart Hoffman, chief economist at PNC Financial Services Group.
A spate of weaker March economic reports had sparked worries that the economy was perhaps not just going through a "soft patch," but headed for a more pronounced slowdown. The jobs report seemed to temper some of those concerns.
But the report also underlined that the Fed will keep raising rates, possibly at a faster clip if inflation shows signs of accelerating.
That sparked a jump in bond yields and pressured rate-sensitive stocks like financials, although the sector was also under fire following a bearish Merrill Lynch note this morning on some big banks.
Treasury prices slumped, raising the ten-year note yield to 4.26 percent from 4.15 percent late Thursday. Bond prices and yields move in opposite directions.
The Treasury market may have been responding, in particular, to the rise in hourly earnings in the April report. Earnings rose 0.3 percent, versus forecasts for a rise of 0.2 percent.
PNC's Hoffman said that the rise in hourly earnings was not inflationary enough to ring alarm bells. "What it does show is that the Federal Reserve has more work to do," he added.
On the move
Dow component Honeywell International (up $1.68 to $36.85, Research) rallied 4.8 percent, lifted by rumors that rival United Technologies (down $0.36 to $102.03, Research) could be interested in buying the aerospace and industrial conglomerate, Reuters reported.
General Electric (unchanged at $35.85, Research) said it was restating earnings due to an internal audit that showed certain accounting didn't comply with standards.
The conglomerate also boosted its second-quarter guidance and reaffirmed its annual earnings target, but shares ended unchanged.
Siebel Systems (up $0.42 to $9.63, Research), under pressure from its shareholders, said late Thursday that it will pursue acquisitions and other investments, and cut costs -- news that boosted the stock 4.5 percent in active Nasdaq trade.
Shares of Pixar Animation Studios (up $2.43 to $48.70, Research) jumped 5.3 percent in active trading after reporting higher-than-expected quarterly earnings. The producer of "Toy Story" and "The Incredibles" also said it renewed talks with estranged distribution partner Walt Disney (up $0.18 to $26.89, Research).
McAfee (up $3.20 to $25.55, Research), a security software maker, rallied more than 14 percent on its improved earnings and outlook.
On the downside, UTStarcom (down $3.21 to $7.24, Research) plunged over 30 percent in very active trading after reporting weaker first-quarter profit and warning that second-quarter sales will come in well below estimates. The telecom gear maker cited a sales slump in key Chinese markets.
Market breadth was mixed and volume was light. On the New York Stock Exchange, losers edged winners by a narrow margin on volume of 1.36 billion shares. On the Nasdaq, advancers topped decliners by a narrow margin on volume of 1.54 billion shares.
U.S. light crude oil for June delivery added 13 cents to settle at $50.96 a barrel on the New York Mercantile Exchange.
In currency trading, the dollar rose versus the euro and the yen.
COMEX gold fell $3.80 to settle at $426.90 an ounce, falling with other dollar-traded commodities.