U.S. stocks advanced on Friday as data showed the economy shed far fewer jobs than expected last month, brightening the outlook for the economy and profits.
Economically sensitive sectors like industrials, technology, consumer and financials made the day's best showing. The S&P financial index <.GPSF> rose 1.8 percent, while shares of manufacturer 3M Co
Limiting the market's advance was the dollar's strength, which caused commodity prices and related stocks to fall, and helped fuel expectations that the U.S. Federal Reserve might have to start considering raising interest rates. Even so, more stocks rose than fell.
U.S. employers cut 11,000 jobs in November, the smallest loss since the recession began in December 2007, and the unemployment rate also dipped, according to a Labor Department report.
The internals of the official non-farm payrolls release spoke to a much broader improvement in the overall employment picture, said Peter Kenny, managing director at Knight Equity Markets in Jersey City in New Jersey.
An improving labor market is considered crucial in fostering a recovery and in bolstering consumer confidence, which would help increase U.S. corporate profits.
To foster a recovery, the Federal Reserve has kept U.S. benchmark interest rates close to zero percent, a stance that analysts said might have to change as the economy showed more signs of life.
The Dow Jones industrial average <.DJI> gained 22.75 points, or 0.22 percent, to end at 10,388.90. The Standard & Poor's 500 Index <.SPX> added 6.06 points, or 0.55 percent, to finish at 1,105.98. The Nasdaq Composite Index <.IXIC> rose 21.21 points, or 0.98 percent, to close at 2,194.35.
At one point during the session, stocks rallied briskly, with the Dow, the S&P 500 and the Nasdaq climbing to their highest levels in 15 months. The Dow rose as high as 10,516.70, while the S&P 500 climbed as high as 1,119.13, and the Nasdaq jumped as high as 2,214.39.
For the week, the Dow rose 0.8 percent, the S&P 500 gained 1.3 percent and the Nasdaq advanced 2.6 percent.
The Nasdaq got a lift from chipmakers, including Intel Corp
Falling commodity prices weighed on natural resource companies, sending the S&P materials index <.GSPM> down 1.2 percent and the S&P energy index <.GSPE> down 0.8 percent.
The U.S. dollar index <.DXY>, which measures the greenback against a basket of six other major currencies, jumped 1.5 percent on the upbeat jobs data.
In contrast, U.S. crude oil futures fell 99 cents to settle at $75.47 a barrel.
Since the broader market hit a bottom in early March, stocks and the dollar have had a strong inverse correlation. When the dollar falls, stocks tend to rise and vice versa.
That correlation partly reflects the so-called carry trade, whereby investors borrow a currency offering relatively low borrowing costs in order to invest the proceeds in higher-yielding assets denominated in that low-yield currency.
A stronger U.S. dollar caused investors to unwind some of their dollar carry-trade positions, according to analysts.
The government also reported that the U.S. unemployment rate slipped in November to 10.0 percent from October's rate of 10.2 percent, which was a 26 1/2-year high.
Stocks also got some help from other government data showing inventories at U.S. factories rose for the first time in over a year in October, while factory orders increased 0.6 percent.
Volume was above average on the New York Stock Exchange, with 1.57 billion shares changing hands, above last year's estimated daily average of 1.49 billion, while on the Nasdaq, about 2.32 billion shares traded, above last year's daily average of 2.28 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of 7 to 3, while on the Nasdaq, about 10 stocks rose for every three that fell.
(Reporting by Caroline Valetkevitch; Additional Reporting by Ellis Mnyandu; Editing by Jan Paschal)