On Friday, the 30-stock Dow Jones industrial average finished higher by 39.51 points, or 0.50%, at 8,017.59. The broad S&P 500 index moved up 8.12 points, or 0.97%, to 842.50. The tech-heavy Nasdaq composite index added 19.24 points, or 1.20%, to 1,621.87. On the New York Stock Exchange, 21 stocks were higher in price for every 10 that declined. Nasdaq breadth was 16-11 positive.
Treasuries plunged. The dollar index eased. Gold and crude oil futures fell.
The stock market's higher close followed earlier bouts of profit taking, as investors digested news of another hefty drop in nonfarm payrolls in March while preparing for next week's start of the first-quarter corporate earnings season. The gains extended rallies from earlier this week that drove all three major market indexes up more than 20% off their bear-market lows in early March.
Federal Reserve Chairman Ben Bernanke discussed the Fed's balance sheet, which has expanded in bid to help the economy work out of recession.
In a speech Friday, Federal Reserve Chairman Ben Bernanke said the Fed has used its balance sheet "prudently," in conjunction with a multiplicity of new programs. He also cited the drop to record lows in mortgage rates as a sign that the Fed's actions are having their intended effect.
Bernanke also indicated the Fed has taken care to design its programs so that they will be unwound as markets and the economy revive. The speech detailed the various Fed programs as it essentially retooled its balance sheet to meet the needs of the credit markets.
In economic news Friday, the U.S. ISM nonmanufacturing index slipped to 40.8 in March from February's 41.6. The index is up from its all-time low of 37.4 in November 2008, but is well off its 49.6 print a year ago. However, the business activity index improved to 44.1 versus 40.2 (it was 52.2 in March 2008). New orders fell to 38.8 from 40.7. The employment index slid to 32.3 from 37.3. New export orders dipped to 39.0 from 40.0. Prices paid fell to 39.1 from 48.1. The composite manufacturing and nonmanufacturing edged down to 40.3 from 40.9.
"The data disappointed expectations for modest improvement and that should give Treasuries a little boost at the expense of stocks," says Action Economics.
U.S. nonfarm payrolls lost 663,000 jobs in March, and a bit stronger than the 650,000 expected. The unemployment rate rose to 8.5% from 8.1% the month before, though about as expected. While February's 651,000 decline was not revised, January was revised down to -741,000 (previously 655,000), with job losses averaging 685,000 in the first quarter. Average hourly earnings rose 0.2%. Average weekly hours dipped to 33.2 from 33.3. Total goods-producing sector lost 305,000 jobs, with a 161,000 decline in manufacturing, and an 126,000 drop in construction. Business services lost 133,000 jobs. Only health care added jobs, about 8,000.
"The headline data were about in line with forecasts. While the data indicates the job weakness continues, the report failed to realize the worst fears of a greater than 700,000 drop in jobs," says Standard & Poor's senior economist Beth Ann Bovino.