Stocks cap strong week with gains led by Yahoo bid
NEW YORK -- Stocks capped a week of huge gains with a sizable advance Friday after Wall Street set aside some anxiety over news that the economy lost jobs last month and focused on Microsoft's bid for Internet company Yahoo and a possible rescue plan for the troubled bond insurance sector.
The Dow Jones industrial average and the Standard & Poor's 500 index each rose more than 4% for the week, their steepest gains since March 2003.
Stocks fluctuated at times Friday, however, as investors weighed seemingly contradictory readings on the economy. Wall Street was pleased by Microsoft's $44.6 billion bid for Yahoo. Merger news, which often energizes stocks, has been in short supply for months.
The Dow Jones industrial average rose 92.83, or 0.7%, to 12,743.19 after climbing more than 200 points Thursday.
Broader stock indicators also moved higher. The Standard & Poor's 500 index rose 16.87, or 1.2%, to 1395.42, and the Nasdaq composite index advanced 23.50, or 1.0%, to 2413.36.
For the week, the Dow jumped 536.02 points, or 4.4%. The Standard & Poor's 500 index, the market measure most closely followed by professional traders, added 4.9% and the Nasdaq composite index rose 3.8%.
But the mix of economic news reminded investors of the continuing fallout from the housing and mortgage crisis.
The first blow Friday came from the Labor Department's worrisome employment report for January. The economy lost 17,000 jobs, marking the first contraction of the labor market in more than four years. The news confounded economists, who were expecting 70,000 new jobs, according to Thomson/IFR. The unemployment rate fell to 4.9% from 5% in December, though the move came as the labor pool shrank.
The Commerce Department added to the fray, reporting that construction spending dropped 1.1% in December — the most in 15 months and twice what analysts expected.
And rating agency Moody's Investors Service warned on a conference call Friday that it expects to downgrade some bond insurers this month. A top rating is crucial for bond insurers to draw new business and for investors to feel secure about the bonds these companies already insure.
