NEW YORK (CNN/Money) -
A surprisingly strong March employment report propelled U.S. stock markets Friday. Several sessions of gains also allowed the major indexes to rally for the week.
The Dow Jones industrial average (up 97.26 to 10470.59, Charts) gained nearly 1 percent, the Standard & Poor's 500 (up 9.64 to 1141.81, Charts) index gained 0.85 percent and the Nasdaq composite (up 42.16 to 2057.17, Charts) added 2.1 percent. Bonds tanked and the greenback rose on the report.
For the week, the Dow rose 2.5 percent, the S&P 500 added just over 3 percent and the Nasdaq composite added just under 5 percent.
Employers added 308,000 new jobs to their payrolls in March, the Labor Department said, surpassing even the most optimistic forecasts of economists, who on average, were expecting around 123,000 new jobs, according to Briefing.com. Employers created an upwardly revised 46,000 jobs in February. The January number was also revised upward.
"The market went down almost four weeks in a row in part on the February payrolls number with traders saying the economy is good, but we have no jobs," said Robert Long, vice president of investments at Melhado, Flynn & Associates. "Today changes that. Three hundred thousand is a super-strong number, and then the January and February numbers were revised up, too.
The unemployment rate inched up to 5.7 percent in March, from 5.6 percent in February, when economists had expected it to hold steady. However, the payrolls number and the unemployment rate are generated by different surveys and stock market investors focused on the payrolls, which gained at the fastest pace in nearly four years.
Worries that the slowdown in the economic recovery would start to impact corporate profits and therefore not justify a continued rally kept stock markets rangebound during the first quarter. Markets were also kept in check by a bout of profit taking after the stock market rally of 2003 and early 2004.
While one month of strong payrolls doesn't ensure that the economic recovery is back on the fast track, the report did seem to assuage some fears, boosting the indexes.
Long and other analysts speculate that relief about hiring combined with expectations for strong first-quarter earnings -- the reporting of which begins next week -- should enable the rally to continue, particularly as the market has just come through a correction phase.
The Institute for Supply Management's March read on the services side of the economy is due Monday just after the start of trading. It probably rose to 61 from 60.8 in February, according to a consensus of economists surveyed by Briefing.com.
The market gains were pretty broad-based, although led by technology. Tech led the rally, led the correction period, and is likely to lead the next phase of the rally again, analysts said.
On the Dow, 25 out of 30 components moved higher. Among the big movers: Alcoa (AA: up $1.27 to $35.90, Research, Estimates) gained 3.7 percent, Microsoft (MSFT: up $0.77 to $25.85, Research, Estimates) gained over 3 percent, Intel (INTC: up $0.74 to $28.12, Research, Estimates) rose 2.7 percent and IBM (IBM: up $1.83 to $94.20, Research, Estimates) rose about 2 percent.
Among other movers, Sun Microsystems (SUNW: up $0.87 to $5.06, Research, Estimates) soared 20.8 percent and topped the Nasdaq's most-actives list on news it will get $1.6 billion from Microsoft in the settlement of a long standing legal dispute between the two companies. Sun also said it will cut 3,300 jobs and take a $475 million charge as it looks to cut costs and return to profitability. The company said it will spread the charge over several quarters, including $200 million in its third quarter.
Semiconductors and the chip gear makers were also stronger after the release of the February World Semiconductor Trade Statistics (WSTS) survey, which showed global chip sales rose 31 percent in the month from a year earlier. In addition, the sector benefited from a bullish JP Morgan note on the chip gear makers.
Market breadth was positive and trading volume was heavy. On the New York Stock Exchange, where 1.60 billion shares traded, gainers narrowly beat losers. On the Nasdaq, advancers outnumbered decliners by eleven to five as 2.16 billion shares traded.
Treasury bond prices tumbled. The 10-year note lost 2-4/32 points in price, pushing the yield up to 4.14 percent from 3.88 percent late Thursday. The dollar gained versus the yen and euro.
Among commodities markets, NYMEX crude oil futures finished the day 12 cents higher at $34.39 a barrel. COMEX gold plunged $6.30 to settle at $422.50 an ounce.