NEW YORK (CNN/Money) -
Stocks ended lower Friday, as investor caution over the market's proximity to recent highs outweighed enthusiasm about stronger-than-expected jobs growth in October. But the major indexes managed to close the week higher.
The Nasdaq composite (down 5.63 to 1970.74, Charts) slipped about 0.3 percent Friday, while the Dow Jones industrial average (down 47.18 to 9809.79, Charts) and the Standard & Poor's 500 (down 4.84 to 1053.21, Charts) dropped 0.5 percent, after trading near unchanged for most of the day.
Despite the past few days of lackluster trading, all three indexes managed to end the first week of November, a month that is traditionally one of the best for the market, on an up note, following an unusually strong October. The Nasdaq rose 2 percent for the week, while the other indexes were little changed, with the Dow edging up about 8 points and the S&P seeing a 2.5-point gain.
With the economy clearly on the way to recovery, investors got confirmation early Friday that the job market may be beginning to expand again. Growth in the labor market could help sustain the rally that has sent the Nasdaq to levels not seen in nearly two years. But Friday's job report, although stronger than forecast, failed to trigger much buying. Investors were cautious, and some decided to cash in, as the Nasdaq tested a 21-month high and the Dow traded at levels not seen in 17 months.
"I'm coming out feeling pretty good ... normally on Friday you get some profit taking," said Bill Roe, portfolio manager at Melhado Flynn & Associates. "People are still somewhat cautious -- and the more cautious they are, the more confident I am that the market is going to go higher."
Next week, investors will be hit with several economic reports. Figures on the September trade deficit, October producer prices, which is a measure of inflation, and October industrial production and capacity utilization are all scheduled.
Retailers will also be in focus. A report on retail sales in October comes out Friday, and leading up to it several retailers, including Wal-Mart (WMT: Research, Estimates), will post quarterly results throughout the week.
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Abercrombie (ANF: Research, Estimates), J.C. Penny (JCP: Research, Estimates), May Department Stores (MAY: Research, Estimates), Ann Taylor (ANN: Research, Estimates), Target (TGT: Research, Estimates), Kohl's (KSS: Research, Estimates) and Starbucks (SBUX: Research, Estimates) are among the other retailers scheduled to report next week.
Tech heavyweight Dell Computer (DELL: Research, Estimates) was also set to post its quarterly report on Thursday after the close of trading. Wall Street, on average, expects Dell to post a profit of 26 cents a share, up from 21 cents a share in the same period last year.
Jobs grow in October
Strong growth on the jobs front caught a large part of investors' focus Friday.
The Labor Department said the unemployment rate dipped to 6 percent in October from 6.1 percent the prior month. Economists had expected no change. The economy created 126,000 jobs in the month after adding a revised 125,000 in September, the biggest monthly jobs growth since January. The number of jobs added to the economy was double the 58,000 forecast by economists in a poll by Reuters Research.
"This [jobs report] is nothing short of spectacular," said Art Hogan, chief market analyst at Jefferies & Co.
The government also issued positive data on wholesale inventories, which surged 0.4 percent in September after a revised 0.1 percent drop in August. Analysts were expecting inventories to climb 0.1 percent. The jump was the biggest rate of increase in wholesale stocks since March.
Altria, McDonald's in focus
On the corporate front, Altria (MO: up $2.21 to $49.51, Research, Estimates), parent company of tobacco processor Philip Morris, headed 4.7 percent higher after Merrill Lynch added the company to its Focus 1 List and raised its price target on the stock to $63 from $50.
Another Dow component, McDonald's (MCD: up $0.03 to $26.01, Research, Estimates), advanced less than 1 percent following news the company's U.S. sales jumped 15.1 percent, beating Wall Street's expectations. The fast-food chain also said its subsidiary, McDonald's Holdings Co. Ltd. (Japan), will withdraw from its Pret A Manger sandwich chain joint venture, cut costs and get back to the basics of selling burgers and fries.
Shares of Pixar Animation Studios (PIXR: up $1.53 to $71.69, Research, Estimates) bounced 2.2 percent after the company posted a third-quarter profit that fell from a year earlier but beat Wall Street's average estimate by 10 cents a share, according to Reuters Research.
Also aiding the Nasdaq, graphics chip designer nVidia (NDVA: Research, Estimates) surged 19.7 percent after posting a quarterly net profit, compared with a loss in the same period last year, after the close of trading Thursday. The company also said revenue rose a stronger-than-expected 13 percent from a year earlier.
But homebuilding stocks came under pressure. Credit Suisse First Boston downgraded some members of the sector to "neutral" from "outperform," including Toll Brothers (TOL: down $2.41 to $37.66, Research, Estimates), which slipped 6 percent; Lennar (LEN: down $4.00 to $90.99, Research, Estimates), down 4.2 percent; M.D.C. Holdings (MDC: down $3.95 to $66.15, Research, Estimates), which fell 5.6 percent, and Ryland Group (RYL: down $6.43 to $86.50, Research, Estimates), down 6.9 percent.
Market breadth was positive, with gainers edging past losers on the Nasdaq, where 1.9 billion shares changed hands. On the New York Stock Exchange, advancers beat decliners by a six-to-five margin and 1.4 billion shares traded.
Treasury prices tumbled after the employment report and yields rose. The 10-year note dipped 1/4 of a point in price to yield 4.44 percent, up from 4.41 percent late Thursday. The dollar fell against the yen and euro.
NYMEX light sweet crude oil futures gained 59 cents higher to $30.85 a barrel. COMEX gold rose $2.70 to $383.40 an ounce.
European markets ended the day higher, bouncing after the U.S. jobs report. Asian-Pacific stocks ended mixed, with Tokyo's Nikkei index up 0.7 percent.