Stocks Finish Broadly Higher

Major indexes climbed Friday after the pace of U.S. job losses slowed in April and bank stress test results were not as bad as feared

U.S. stocks closed solidly, broadly higher Friday after April U.S. employment data showed a slowing in job losses and government stress tests indicated that U.S. banks aren't in as bad shape as some investors had feared.

Financial stocks were up following the release after Thursday's market close of the results of the government's stress test of 19 major U.S. banks. The Fed sees up to $600 billion in bank losses. Energy issues were also higher as crude oil prices continued to advance.

The market was also seeing some buying following news that April nonfarm payrolls fell 539,000 after skidding 699,000 in March, the jobless rate rose to 8.9% from 8.5%, and wholesale inventories fell 1.6%. The data suggest the economy might be finding its footing, according to S&P MarketScope.

On Friday, the 30-stock Dow Jones industrial average finished higher by 164.80 points, or 1.96%, at 8,574.65. The broader S&P 500 index gained 21.84 points, or 2.41%, to 929.73. The tech-heavy Nasdaq composite index added 22.76 points, or 1.33%, to 1,739.00. On the New York Stock Exchange, 26 stocks were higher in price for every four that declined. Nasdaq breadth was 24-7 positive. Trading was active.

Treasuries were higher. The dollar index was sharply lower. Gold futures were little changed.

Richmond Federal Reserve Bank President Jeffrey Lacker said he sees the recession ending later this year in a speech on the economic outlook before the Washington, D.C., Chamber of Commerce. He said he spotted evidence of consumers spending "more vigorously" and "improving housing data" to back up his claim. Lacker said the worst of manufacturing declines as over, though the non-residential construction sector as still vulnerable. He said deflation risks are overstated and inflation risks from the Fed's bigger balance sheet as "legitimate," while choosing the right time to end monetary stimulus as challenging. In that regard he is leaning toward avoiding risks of moving too slowly in removing stimulus.

The results of the U.S. stress tests did not reveal any major surprises and add to the perception that financial and economic conditions are improving. Of the 19 major banks the market focused on, 10 are being required to raise capital totaling $75 billion with potential for $599 billion of losses if the economic performance is worse than expected.

Bank of America's Kenneth Lewis said he plans to close a $33.9 billion capital gap by selling assets and tapping future profits after his "humbling" ouster as chairman last month, according to a Bloomberg News report. The lender, the biggest U.S. bank by assets, plans to sell common shares, divest at least two businesses and add board members after the results of the stress test, seeking to reduce government involvement in its operations.

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