Thank GDP it's Friday
Major gauges end the week on a high note as investors welcome signs of an economic slowdown; falling oil also factors.
NEW YORK (CNNMoney.com) -- Stocks rallied Friday, helping the Dow Jones Industrial average notch it's biggest weekly percentage gain in over a year, after the latest GDP report gave investors reason to believe that the Federal Reserve won't raise interest rates again in August.
Oil lost over a dollar, bonds rose and the dollar fell.
The Dow (up 119.27 to 11,219.70, Charts) gained 1.1 percent.
The major stock gauges jumped Monday and Tuesday but ended slightly lower Wednesday and stumbled Thursday as the technology sector turned negative late in the session.
But after Friday's gains, the Nasdaq rose 3.5 percent for the week, the S&P 500 was up 3 percent and the Dow industrials added 3.1 percent, marking the biggest weekly percentage gain since May 20, 2005, according to Ned Davis Research.
Before the opening bell, a report on gross domestic product, the broadest measure of the nation's economic activity, confirmed a slower economy and raised the possibility of a pause from the Fed.
The Commerce Department said GDP grew at a 2.5 percent annual rate, in the second quarter, down from the 5.6 percent growth logged in the first quarter. Economists surveyed by Briefing.com had forecast growth of 3 percent in the most recent quarter. (Full story.)
"What we're seeing is a little bit of market anticipation that the Fed might pass on the rate hike in August," according to Fred Dickson, chief market analyst at D.A. Davidson & Co.
"But the last two times this has happened, the market rallied in anticipation of the same thing [in May and June] and then you had nasty selloffs," Dickson said.
"The big question will be what happens next," he added. "The economic data next week will be looked at very closely."
Economic numbers on tap include the Chicago PMI, ISM and the jobs report on Friday. Economists surveyed by Briefing.com expect 140,000 jobs to have been created in July.
Gains were broad based, with 29 out of 30 Dow components rising.
And Krispy Kreme Doughnuts (up $0.40 to $8.25, Charts) was up 5 percent after the company said it agreed to buy three stores in Southern California for $2.9 million as part of a legal settlement with its franchisee in the region.
On the downside, shares of Chevron (down $1.68 to $66.05, Charts) fell 2.5 percent after the oil company reported that quarterly profit rose, driven by a surge in crude oil prices, but the results fell short of expectations.
McAfee (down $1.67 to $22.35, Charts) tumbled 7 percent after the antivirus software maker reported a lower quarterly net profit and said it would likely restate past financial results. The company was also downgraded by WR Hambrecht to "hold" from "buy."
Market breadth was positive. On the New York Stock Exchange, winners topped losers four to one on volume of 1.7 billion shares. On the Nasdaq, advancers topped decliners more than two to one on volume of almost 1.9 billion shares.
Light, sweet crude oil for September delivery fell $1.30 to $73.24 a barrel on the New York Mercantile Exchange.
Treasury prices rose, lowering the yield on the benchmark 10-year note to about 4.99 percent from 5.04 percent late Thursday. Bond prices and yields move in opposite directions.
COMEX gold for December delivery added $2.30 to $647.80 an ounce.