Stocks rose on Friday as a recent spate of improving economic data beckoned investors back into equity markets for a second day, but analysts warned sentiment remained fragile.
The International Monetary Fund underscored the sense of improving fundamentals after First Deputy Managing Director John Lipsky said the fund may lift its 2010 growth forecast for the world economy amid signs the decline in global output was moderating.
The Dow and S&P 500 snapped a three-day losing streak on Thursday as data on the job market and regional manufacturing revived hopes that the recession-hit economy is stabilizing.
In general the economic data that we've seen over the past several months indicates that the economy is recovering, and the majority of data has been less bad, said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.
But, he continued, we still have not seen economic data that indicated an economic expansion has taken hold. Sheldon warned of a pullback in prices over the coming weeks.
Goldman Sachs gave technology investors a new reason to begin buying after the bank added Microsoft Corp
Shares of software maker Microsoft, a Dow component, rose 3.11 percent to $24.23.
The Dow Jones industrial average <.DJI> was up 49.05 points, or 0.57 percent, at 8,604.65. The Standard & Poor's 500 Index <.SPX> was up 7.59 points, or 0.83 percent, at 925.96. The Nasdaq Composite Index <.IXIC> was up 24.67 points, or 1.36 percent, at 1,832.39.
Analysts said that the quarterly expiration and settlement of June equity options and futures, a convergence known as quadruple witching, will increase volatility throughout the session, possible pushing indexes higher.
After gaining as much as 40 percent from a 12-year closing low in early March, the S&P 500 has retreated as investors reassessed the potential strength of an economic recovery. Thursday's data revived some optimism, but analysts said real improvement is needed to sustain the rally.
On Thursday, government data showed the number of people staying on jobless benefits fell for the first time since January, while manufacturing in the U.S. Mid-Atlantic region contracted much less than expected in June.
After the close on Thursday, Research In Motion issued an outlook that fell short of expectations. The stock fell 2 percent to $75.10, even as the company reported a rise in quarterly profit that topped forecasts.
(Editing by Padraic Cassidy)