NEW YORK (CNNMoney.com) -- A tech rally propelled the Nasdaq and helped the broader market erase losses Friday, as investors took in stride a surprisingly weak jobs report amid other recent signs that the economy appears to be stabilizing.
The Dow and S&P 500 ended at 15-month highs and the Nasdaq at a 16-month high to cap off the first trading week of 2010.
Following Monday's big rally, stocks have been mixed to lower all week, with investors showing reluctance to move after the major gains of 2009 and ahead of the jobs report.
Although the economy appeared to turn a corner in the fourth quarter, market participants are looking for further signs of stability before they push stocks a lot higher. In particular, still-high unemployment and sluggish consumer spending remain a worry.
"The big picture is that there are still a scary number of people out of work, particularly when you think about that consumer spending fuels two-thirds of economic growth," said Len Blum, managing director at Westwood Capital.
Blum said that Wall Street is split between those who think the economy has turned a corner and those who think that a double-dip recession remains on the table. He said that the jobs report adds weight to the double-dip theory.
"The majority of the positive indicators we've seen are a result of government stimulus and the inventory restocking," he said. "Whether we see a second leg down or just a mediocre recovery is going to depend on whether there is more stimulus since there isn't anything fundamental to drive things right now."
Jobs: Employers cut 85,000 jobs from their payrolls in December, the Labor Department reported Friday. The figure was a surprise to economists who were expecting no change in payrolls, according to a Briefing.com survey.
On a more positive note, November's report was revised to show a gain of 4,000 jobs versus the initially reported loss of 11,000, breaking a 22-month streak of declines.
The unemployment rate, generated by a separate survey, held steady at 10%, in line with forecasts.
On the move: Boeing (BA, Fortune 500), Coca-Cola (KO, Fortune 500), Wal-Mart Stores (WMT, Fortune 500) and Exxon Mobil (XOM, Fortune 500) were the main drags on the Dow. But losses were offset by strength in tech components IBM (IBM, Fortune 500), Microsoft (MSFT, Fortune 500), Intel (INTC, Fortune 500) and Hewlett-Packard (HPQ, Fortune 500).
Citigroup cut its fourth-quarter earnings forecasts on Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500) and JPMorgan Chase (JPM, Fortune 500), saying that fixed-income trading revenues fell in the fourth quarter and are set to fall an additional 15% to 20% in 2010. The companies are also likely to see weaker revenues from their commodity and currency units.
Market breadth was mixed. On the New York Stock Exchange, winners beat losers three to two on volume of 995 million shares. On the Nasdaq, advancers topped decliners eight to five on volume of 2.15 billion shares.
Economy: A report released after the start of trading showed wholesale inventories rose 1.5% in November after rising 0.6% in October. Economists surveyed by Briefing.com thought inventories would fall 0.3%.
Another report release in the afternoon showed consumer borrowing fell by $17.5 billion in November versus the $5 billion expected. Borrowing fell by $3.5 billion in the previous month.
World markets: Asian markets ended higher. In Europe, London's FTSE 100 gained 0.1%, France's CAC 40 rose 0.5% and the German DAX gained 0.3%.
Commodities and the dollar: The dollar tumbled versus the euro and the yen.
Dollar-traded gold inched higher. COMEX gold for February delivery rose $5.20 to $1,138.90 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last month.
U.S. light crude oil for February delivery fell 9 cents to settle at $82.75 a barrel on the New York Mercantile Exchange, further retreating from 15-month highs hit earlier in the week.
Bonds: Treasury prices slipped, raising the yield on the 10-year note to 3.83% from 3.82% late Thursday. Treasury prices and yields move in opposite directions.
Talkback: With the economy in recovery mode and a new year underway, what's your 2010 plan for your portfolio? Will you invest more, less or not at all? Are you willing to take on more risk? E-mail your story to firstname.lastname@example.org and you could be featured in an upcoming article. For the CNNMoney.com Comment Policy, click here.
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