Stocks pick up steam after jobs

NEW YORK (CNNMoney.com) -- Stocks posted modest gains near midday Friday after a report showing solid job growth pointed to an economy growing at a healthy pace, but probably not quickly enough to spur the Federal Reserve to boost interest rates.

The Dow Jones industrial average (up 48.12 to 13,613.96, Charts) climbed about 0.4 percent about 2-1/2 hours into the session. The tech-heavy Nasdaq composite (up 6.36 to 2,663.01, Charts) and the broader S&P 500 (up 3.57 to 1,528.97, Charts) each added 0.2 percent.

Stocks rose Monday and Tuesday but the major gauges struggled Thursday as Treasury yields rose after a report showing surprising strength in the service sector. Financial markets were closed Wednesday for Independence Day.

But the market turned higher Friday morning after a report showed surprising payroll growth in June and upward revisions to earlier months. While the job report initially added to traders' worries about higher interest rates - and Treasury bond yields rose - stock traders focused more on the solid growth part of the story.

While job growth slowed a bit to 132,000 in June, the reading was a shade above economists' forecasts for 125,000 and April and May numbers were revised higher. The unemployment rate held steady at 4.5 percent, in line with forecasts.

The job numbers, rates and oil prices will likely set the tone for stocks Friday, according to Fred Dickson, chief market analyst at D.A. Davidson & Co., although volume will be light because many traders were off for a long JUly 4th break.

"But equity investors should feel fairly confident that this is just another sign that the economy is picking up steam," Dickson said.

In corporate news, Microsoft (down $0.02 to $29.97, Charts, Fortune 500) said late Thursday that it would take a more than $1 billion charge for repairs to its Xbox 360 video game consoles. It also warned it had missed shipment targets for the end of June. Shares of the Dow component edged lower in early trading.

Shares of Motorola (up $0.02 to $17.82, Charts, Fortune 500) ticked higher despite the cell phone maker's announcement that it expects to incur a net pretax charge of $101 million in the second quarter in connection with previously announced staff cuts.

Burger King (down $0.10 to $26.45, Charts) fell slightly after the fast-food chain announced that it has begun the rollout of transfat-free cooking oil to its restaurants nationwide.

Shares of UBS (up $0.51 to $61.09, Charts) climbed nearly 1 percent on news that the company is replacing CEO Peter Wuffli with deputy CEO Marcel Rohner, among other executive management changes, after a hedge fund loss of $124 million on a large bet on subprime mortgages.

Genzyme (down $3.54 to $61.33, Charts) sank over 5 percent after the drugmaker said its treatment for diarrhea associated worked no better than standard medication.

In more merger news, medical supply company Advanced Medical Optics (down $0.77 to $35.12, Charts) has offered to buy Bausch & Lomb (down $0.22 to $71.78, Charts) for $75 in cash and stock, according the contact lens-maker. The offer is an attempt to trump the $65 a share offer that Bausch & Lomb already agreed to in May from private-equity firm Warburg Pincus.

And Chicago Mercantile Exchange Holdings (down $5.94 to $549.75, Charts) agreed to boost its bid for CBOT Holdings (up $9.79 to $215.94, Charts) before a shareholder vote Monday.

Market breadth was positive. On the New York Stock Exchange, losers topped winners by a margin of four to three on volume of 500 million shares. On the Nasdaq, decliners edged out advancers seven to six as 700 million shares changed hands.

Treasury prices fell after the jobs report, further raising the yield on the benchmark 10-year note to 5.18 percent from 5.14 percent late Thursday.

Oil prices rose. U.S. light crude gained 79 cents to $72.60 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery rose $4 to $654.60 an ounce.

Overseas, European stocks rose in afternoon trading. Most Asian markets finished the session lower.