Stocks suffered considerable uncertainty throughout most of Friday's session, ultimately closing higher on the day. The lack of direction seen for much of the day came as traders digested weak employment data along with some positive remarks from Fed Chairman Bernanke.
On the economic front, the Labor Department said that non-farm payroll employment fell by 663,000 jobs in March following an unrevised decrease of 651,000 jobs in February. The drop in jobs came roughly in line with economists' expectations of a decrease of 658,000 levels.
With the continued decrease in jobs, the unemployment rate rose to 8.5 percent in March from 8.1 percent in the previous month, in line with expectations. The increase lifted the unemployment rate to its highest level since November of 1983.
While the report points to continued weakness in the labor market, some investors were pleased that it did not show a notable surprise to the downside. Others feel that the weakness was already priced into the markets, as employment data is seen as a lagging indicator.
Separately, the Institute for Supply Management released its report on activity in the service sector for March, showing that its index of activity in the sector unexpectedly fell to 40.8 in March from 41.6 in February, with a reading below 50 indicating a contraction in the sector.
Meanwhile, Bernanke offered encouraging news, saying that programs enacted by the Federal Reserve to unfreeze the credit markets are working. Bernanke praised the actions of policymakers as having lowered the cost and increased the availability of credit.
In the midst of extraordinarily challenging times for the financial system and economy, Bernanke stated that he is confident that growth will be restored.
Additionally, President Barack Obama delivered a speech in Strasbourg, France, focusing on rebuilding the relationship between Europe and America and noting the need for unity across the Atlantic as nations face terrorist and economic threats.
We find ourselves at a crossroads, Obama said. The same forces that have brought us closer together have also given rise to new dangers that threaten to tear our world apart.
The president said that he plans to lay out a plan in Prague over the weekend that will offer a goal of a world without nuclear weapons.
The major averages had some difficulty sustaining any significant moves for much of the session but showed a notable move to the upside going into the close. The Dow closed up 39.51 points or 0.5 percent at 8,017.59, the Nasdaq closed up 19.24 points or 1.2 percent at 1,621.87 and the S&P 500 closed up 8.12 points or 1 percent at 842.50.
With the gains, the major averages closed higher for the fourth straight session and the fourth straight week. The Dow rose 3.1 percent for the week, while the Nasdaq and the S&P 500 posted weekly gains of 5 percent and 3.3 percent, respectively.
Despite the lack of direction that was shown for much of the session, real estate stocks moved sharply higher over the course of the trading day. The Morgan Stanley REIT Index ended the session up 9.1 percent, at a nearly two-month closing high.
Oil service stocks also turned in strong performances on the day, resulting in a 4.1 percent gain by the Philadelphia Oil Service Index. The gains by oil service stocks came even though the price of oil fell $0.13 to $52.51 a barrel.
Within the oil service sector, Global Industries (GLBL) turned in one of the best performances, ending the session up 12 percent to reach its best closing level in nearly six months.
Significant weakness was also visible in the computer hardware sector, as reflected by the 3.9 percent gain posted by the Computer Hardware Index. With the gain, the index ended the session at a six-month closing high.
Among hardware stocks, Palm (PALM) closed up 6 percent due in part to positive sentiment generated by the release of strong quarterly results and guidance by peer Research in Motion (RIMM). Dell (DELL) also posted a strong gain, rising 8.6 percent.
While banking, brokerage, and semiconductor stocks also showed strong upward moves, considerable weakness remained visible in the gold sector. With the price of the precious metal falling $11.60 to $897.30 an ounce, the Amex Gold Bugs Index closed down 6.4 percent.
Health insurance, pharmaceutical, and biotechnology stocks also performed poorly during Friday's session, helping to limit the upside for the broader markets.
A majority of the Dow components ended the day in positive territory, contributing to the gain posted by the blue chip index.
Banking stocks Bank of America (BAC) and Citigroup (C) turned in two of the Dow's best performances, reflecting the strength that emerged in the banking sector. Bank of America closed up 5 percent, while Citigroup rose 4 percent.
DuPont (DD) also showed a notable upward move, with the chemical giant closing up 2.9 percent. The gain extended a recent upward move by DuPont, which ended the session at its best closing level in nearly three months.
Dow components JP Morgan (JPM), American Express (AXP), and Caterpillar (CAT) also posted strong gains on the day.
At the other end of the spectrum, Microsoft (MSFT) suffered one of the Dow's worst performances, closing down 2.8 percent.
Reflecting the weakness in the pharmaceutical sector, Merck (MRK), Pfizer (PFE), and Johnson & Johnson (JNJ) also posted notable losses. Merck ended the session down 2 percent, while Pfizer and J&J both fell 1.6 percent.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Friday, adding to the strong gains posted in the previous session. Japan's benchmark Nikkei 225 Index closed up 0.3 percent, although well off its best level of the day.
Meanwhile, the major European markets ultimately ended the session mixed. While the German DAX Index closed up 0.7 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index ended Friday's trading down 1.1 percent and 2.3 percent, respectively.
In the bond market, treasuries showed a notable decline over the course of the trading day, driving the yield on the benchmark 10-year note up 15.5 basis points to 2.907 percent.
While trading activity is likely to be subdued next week ahead of the three-day weekend, investors are likely to keep an eye on monthly reports on wholesale inventories, import and export prices and the U.S. trade deficit.
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