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NEW YORK (CNN/Money) -
Stocks surged Friday as a strong -- but not too strong -- June jobs report reassured investors that the economy is hopping, but not so fast as to force the Federal Reserve to speed up its interest rate-hiking campaign.
The rally helped stocks record solid gains for the week.
The Dow Jones industrial average (up 146.85 to 10,449.14, Charts) jumped 1.4 percent, while the broader Standard & Poor's 500 (up 13.99 to 1,211.86, Charts) index added about 1.2 percent.
The tech-fueled Nasdaq composite (up 37.22 to 2,112.88, Charts) climbed 1.8 percent, lifted by strength in chipmakers, networkers and biotechs, in particular.
Treasury prices slipped, boosting yields. The dollar fell versus the euro and gained versus the yen.
Oil prices slipped after hitting record trading highs the previous session.
"Investors are taking solace in the fact that the economy is not overheating, something that's been worrying the market over the past few weeks," said John Forelli, portfolio manager at Independence Investments. "This mixed jobs report takes some of the pressure off that concern for the time being."
The report also would seem to support bets that the Federal Reserve does not have to speed up its rate hiking campaign. The central bank boosted the fed funds rate, a short-term interest rate, by a quarter-percentage point to 3.25 percent last month, the ninth consecutive rate hike since last summer.
Analysts say that the market is currently betting that the Fed will raise rates again at the next policy-setting meeting in August, and that it may pause sometime after that.
Jobs report reassures
Employers added 146,000 jobs to payrolls in June, after adding an upwardly revised 104,000 in May. They were expected to add 195,000 jobs, according to a consensus of economists surveyed by Briefing.com.
The unemployment rate, generated by a separate survey, fell to 5 percent from 5.1 percent in May, the lowest level since September 2001. Economists expected no change.
Although the payrolls number was short of estimates, it apparently was strong enough to fulfill the 'best of both worlds' scenario that stock investors crave -- implying that economic growth is picking up, but not so fast as to be inflationary. That was supported by the modest jump in the average hourly wage component of the report, which was in line with estimates.
While the June payroll number was a bit disappointing, the gain was nonetheless decent, said Stuart Hoffman, chief economist at PNC Financial Services Group. Paired with the upward revisions to payrolls in the previous two months, the trend appears to be that hiring picked up nicely last spring, he added.
"At the same time, many retailers and the automakers have had good June numbers, despite the rise in oil prices (over the last month)," Hoffman said. "Overall, there's some relief right now that the economy is indeed strong, but not overheating."
In addition to the upbeat economic news, stocks on Friday benefited from solid earnings from Alcoa and a drop in crude prices from near record highs.
Friday's rally came after stocks managed modest gains Thursday, reversing early losses, as investors absorbed the terrorist attacks in London.
Alcoa and other movers
In corporate news, Alcoa (up $1.11 to $27.20, Research) reported quarterly results late Thursday, unofficially setting the second-quarter earnings reporting period in motion by being the first Dow component to release results.
The aluminum producer reported quarterly earnings and revenue that rose versus the same quarter a year earlier, exceeding estimates. Shares gained 4.2 percent.
"People were really fearing the industrial companies were going to have had a hard time in the quarter, and Alcoa's results, while not spectacular, seemed to cool those concerns," Hoffman added.
The rally was broad-based, with 28 out of 30 Dow issues rising.
In addition to Alcoa, a number of other Dow stocks gained at least two percent, including Coca-Cola (up $0.97 to $42.73, Research), IBM (up $1.92 to $79.30, Research), Intel (up $0.72 to $27.28, Research), General Electric (up $0.81 to $34.99, Research), General Motors (up $0.86 to $34.68, Research), McDonald's (up $0.65 to $28.65, Research) and Merck (up $1.02 to $31.00, Research).
Accenture (up $2.01 to $24.21, Research) reported earnings late Thursday that rose from the prior year and beat estimates, on revenue that rose but was shy of estimates. The stock jumped 9 percent.
WPT Enterprises (up $8.75 to $26.50, Research) -- owner of the World Poker Tour television series -- soared 49.3 percent in active Nasdaq trading after a champion poker player and a team of investors made an unsolicited $700 million bid for the company.
On the downside, Siebel Systems (down $0.20 to $8.59, Research) lost 2.3 percent in active trading after warning that fiscal second-quarter revenue will miss expectations. The business software maker also said it will take a charge of up to $90 million.
Zhone Technologies (down $0.70 to $2.87, Research), a network gear maker, slumped nearly 20 percent in unusually active Nasdaq trading after saying it would buy Paradyne Networks (up $0.90 to $2.79, Research), a broadband access provider, for about $180 million in stock.
Paradyne shares jumped nearly 48 percent.
Market breadth was positive. On the New York Stock Exchange, winners beat losers by more than three to one on volume of 1.46 billion shares. On the Nasdaq, advancers topped decliners by more than eleven to five on volume of around 1.67 billion shares.
U.S. light crude oil for August delivery fell $1.10 to settle at $59.63 a barrel on the New York Mercantile Exchange, after having jumped as high as $61.90 in the morning as Hurricane Dennis approached the Gulf of Mexico. The record trading high is $62.10, hit on Thursday.
In other economic news, wholesale inventories rose 0.1 percent in May, short of expectations for a rise of 0.5 percent and less than the revised 0.7 percent gain posted for April.
Treasury prices fell, raising the yield on the 10-year note to 4.09 percent from 4.06 percent late Thursday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar fell versus the euro and gained versus the yen.
COMEX gold fell 40 cents to $423.80 an ounce.
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