Stocks finish week on up note
Investors weigh weak March jobs report with bets that the worst may be over for the market. Stocks gain on week.
NEW YORK (CNNMoney.com) -- Stocks were mixed Friday - at the end of an otherwise upbeat week on Wall Street - as the dismal March jobs report vied with hopes that the worst may be over for the market.
The Dow Jones industrial average (INDU) lost a few points. The broader Standard & Poor's 500 (SPX) index ended just above unchanged and the Nasdaq composite (COMP) added 0.3%.
For the week, the Dow gained 3.2%, the S&P 500 gained 4.2% and the Nasdaq composite added almost 5%.
A weak jobs report caused stocks to sputter at the open, but the major gauges soon turned higher as investors resumed the more positive tone of the last couple of weeks. In the last hour of trade, the advance lost a little steam.
"It was a bad report, but it wasn't a big surprise," said Peter Brodie, director of investments at Bryn Mawr Trust Wealth Management. He said that most market participants already believe that the economy is in a recession, or at least in a very sluggish period, and so that was limiting the impact of the jobs report.
"I think we're nearing a trough economically and investors are starting to look forward to an eventual recovery," he said.
Stocks had gained Thursday as investors eyed the Senate hearing on the collapse and rescue of Bear Stearns and further signs that the worst of the credit crisis is behind the market.
Third month of job cuts. Employers cut 80,000 jobs from their payrolls last month, the Labor Department reported. It was the third consecutive month of job declines. Job losses in the previous two months were also revised higher. Economists thought employers would cut 50,000 jobs.
The unemployment rate, generated by a separate survey, shot up to 5.1% in the month from 4.8% in the previous month. Economists thought it would rise to just 5%. That 5.1% rate is a nearly three-year high.
The report was certainly "ugly," said David Doll, CEO at Kanaly Trust Management. "This would seem to be one of the final nails in the coffin about whether or not we're in a recession."
However, he said the stock reaction Friday was a good sign for those who think that the market has bottomed after months of selling and that investors are trying to anticipate a recovery 6 or 9 months out.
"It would appear that the market sentiment is starting to change, but the next month is still going to be dicey," Doll said. "Earnings are going to be terrible and we'll be looking at pretty bad first-quarter GDP number in about 4 weeks."
Interest rates and the Fed. The weak jobs report will be taken into consideration at the next Federal Reserve policy meeting April 29 and 30. Traders are currently betting that the Fed will cut short-term interest rates by at least a quarter-percentage point, if not a half-percentage point, at that meeting.
However, recent record highs for oil and gas and signs of consumer inflation could limit the Fed's ability to keep cutting rates for much longer.
Earlier this week, Fed Chairman Ben Bernanke said that the economy will shrink in the first half of the year and that a recession is a possibility.
San Francisco Fed Bank President Janet Yellen essentially reiterated that message in a speech Thursday night, saying that the economy has "all but stalled" and could shrink over the first half of the year. Yellen is not a voting member of the Fed's policy committee in 2008.
Company news. Select technology shares gained, lifting the Nasdaq. Advancers included eBay (EBAY, Fortune 500), Apple (AAPL, Fortune 500) and Google (GOOG, Fortune 500).
UBS (UBS) shares rose on reports that the bank's former president is calling for it to split off its investment banking unit, in the wake of the company's more than $37 billion in writedowns related to bad mortgage bets.
But other financial stocks were flat or lower, keeping the blue-chip averages close to the unchanged line. Washington Mutual (WM, Fortune 500), Bank of America (BAC, Fortune 500), Wachovia (WB, Fortune 500) and JP Morgan Chase (JPM, Fortune 500) were among the decliners.
Dell (DELL, Fortune 500) slipped nearly 3% after Goldman Sachs downgraded it to "buy" from "neutral," according to published reports, due to concerns about the tech leader's financial outlook.
Market breadth was positive. On the New York Stock Exchange, winners beat losers 9 to 7 on volume of 1.24 billion shares. On the Nasdaq, advancers topped decliners by a narrow margin on volume of 1.98 billion shares.
Commodity prices. U.S. light crude oil for May delivery rose $2.40 to settle at $106.23 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery rose $8.10 to $917.70 an ounce.
Other markets. The dollar fell versus the euro and the yen.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.46% from 3.58% late Thursday. Bond prices and yields move in opposite directions. 
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