Stocks rebound on upbeat jobs report

NEW YORK (CNNMoney.com) -- Stocks rebounded modestly Friday from one of its worst sessions of the year, as a better-than-expected employment report outweighed lingering credit market fears.

The Dow Jones industrial average (Charts) gained 0.2 percent in the opening minutes of trade.

The broader S&P 500 index (Charts) climbed 0.2 percent, while the tech-laden Nasdaq (Charts) rose 0.5 percent.

Lifting stocks was the better-than-expected October employment report, which came in more than double what was originally forecast, while the unemployment rate held steady at 4.7 percent.

Both economists and Wall Street were closely watching the report for any signs whether this summer's mortgage crisis had spilled over to the broader economy.

Just a day earlier, major gauges plunged on those credit market fears, which was sparked by an analyst downgrade of the banking giant Citigroup (Charts, Fortune 500). The Dow industrials posted its fourth-biggest loss of the year as the 30-stock index fell 362 points.

Problems in the financial sector, however, were likely to get attention once again after The Wall Street Journal reported Friday that No. 1 U.S. brokerage firm Merrill Lynch (Charts, Fortune 500) engaged in deals with hedge funds that may have been aimed at delaying the recognition of losses on its subprime mortgage investments.

The paper reported the Securities and Exchange Commission is likely to look at those arrangements.

On the earnings front, Chevron (Charts, Fortune 500) said its quarterly earnings tumbled 26 percent - more than Wall Street had expected - hurt by tighter refining margins.

Media conglomerate Viacom (Charts) booked better-than-expected results, the company said Friday, helped by the sale of its music publishing business. Viacom shares gained 3.6 percent on the New York Stock Exchange.

Viacom's former corporate sibling CBS (Charts, Fortune 500) posted a better-than-expected gain in earnings after the close Thursday, but its shares slipped slightly in after-hours trading after the negotiating committee of the Writers Guild recommended that writers strike the nation's television networks.

Oil prices rebounded in early trading Friday, making up much of the slide in prices in Thursday trading. The December contract for a barrel of light sweet crude gained $1.07 to $94.56 in electronic trading.

Treasury prices fell, lifting the yield on the benchmark 10-year note to 4.39 percent from 4.36 percent late Thursday.

Gold prices climbed back toward the key psychological level of $800, as COMEX gold for December gained $5.30 to $799 an ounce.

In overseas trading, stocks sold off around the world Friday. Asian stocks fell sharply, with Japan's Nikkei index dropping 2 percent. Major markets in Europe were lower in morning trading.