NEW YORK – Stocks rose Friday, showing unexpected resilience as hopes for an economic recovery sometime next year offset the impact of a dismal unemployment report.
"The key point is that the stock market, or investors, have already priced in weakness for October," said Brian Pears, head of equity trading at Victory Capital Management, which oversees $71 billion.
The blue-chip Dow Jones industrial average rose 59.64 points, or 0.64 percent, to end at 9,323.54, while the technology-packed Nasdaq composite slipped 0.57 of a point to 1,745.73. The Standard & Poor's 500 climbed 3.10 points, or 0.29 percent, to 1,087.20.
For the week, the Dow fell 2.3 percent, Nasdaq was 1.3 percent lower and S&P 500 shed 1.6 percent. Year-to-date, the Dow is down 13.6 percent, Nasdaq 29.3 percent and S&P 500 is 17.65 percent lower.
The U.S. job market shed a whopping 415,000 jobs in October, the most for any month since May 1980. The Labor Department said the unemployment rate soared to 5.4 percent last month from 4.9 percent in September, hitting its highest level in nearly five years.
"As ugly as the headline numbers are, it's really not a surprise to see exceptional weakness. The economy was weak before the (Sept. 11) attacks and certainly we all knew that it had turned down significantly after the attacks," Pears said.
Investors, widely expecting a recession this year, are pinning their hopes on a recovery next year as the Federal Reserve ratchets down interest rates and the government pushes for more tax cuts.
Microsoft Corp. initially added to Thursday's gain after the Justice Department announced its widely expected antitrust settlement with the software giant. But Microsoft shares, which had rallied 6 percent on Thursday in anticipation of the news, lost 44 cents to $61.40.
Juniper lost $2.44 to $19.48, or more than 11 percent, and Ciena Corp declined $1.37 to $15.09, a drop of 8.3 percent, and Qwest shed 3 cents to $11.97, down 0.25 percent.
Exxon Mobil Corp., down 73 cents at $39.76, pressured the Dow as crude oil fell below $20 for the first time in two years amid slackening demand. The oil services index sank 2.93 percent.
Investors have endured a steady stream of dismal economic news this week. The economy suffered its worst contraction in more than a decade, consumer confidence plunged to a seven-year low, consumer spending fell at its fastest pace in more than 14 years and manufacturing fell into its deepest slump since the 1990-1991 recession.
The Federal Reserve, faced with numbers showing the U.S. economy is in poor health, is expected to cut the 2.5 percent benchmark fed funds rate by at least a quarter point on Tuesday. The market is split over whether the Fed will cut rates by a quarter or half point at its meeting. It has already lowered rates nine times this year.
The day's biggest gainers included companies that reported estimate-beating earnings, or gave upbeat forecasts.
J.D. Edwards & Co. surged $1.84 to $9.37, or 24.4 percent after the software firm said earnings will exceed previous estimates, thanks to increasing licensing fees.
Cigna Corp., the third-largest U.S. health insurer, rallied $8.29 to $79.90, or 11.58 percent. Its earnings were hurt by escalating medical costs and weak retirement plan results, but the numbers beat Wall Street's expectations.
Computer Sciences Corp. jumped 18 percent after the world's No. 3 computer services supplier posted earnings that were in line with Wall Street estimates and said future earnings would meet or beat expectations. Lehman Brothers raised its price target for the stock to $48 from $40. Shares added $6.14 to $40.08 on the New York Stock Exchange.
Cisco Systems lost 40 cents to $17.26, or 2.27 percent, ahead of Monday's earnings from the Web gear titan. Cisco is expected to report a sharp drop in profits from a year ago. But more importantly, the Street will be tuned in carefully for the company's forecast for the current quarter.
Web real estate site Homestore.com Inc., one of the last survivors in the dot-com sector, sank $2.71, or 54 percent, to $2.28. The company stunned investors by reporting a steep loss on a big drop in online ad revenues.
Noven Pharmaceuticals Inc. tumbled $7.05 to $15.20 after the maker of patches that deliver drugs through the skin said earnings and revenues both fell. Pharmaceutical firm CIMA Labs Inc., adding to early losses, plunged $18.32 to $36.69, a drop of more than 33 percent, after it posted earnings that beat forecasts. But CIMA Labs scaled back its outlook, citing order deferrals.
Big losers included NiSource Inc. , which tumbled more than 12 percent, or $2.72 to $19.40. Goldman Sachs and Merrill Lynch cut ratings on NiSource after the diversified natural-gas distributor reported a wider-than-expected loss.
Advancing issues narrowly outnumbered decliners 15 to 14 on the New York Stock Exchange. Volume was 876.78 million shares, compared with the 991.88 million shares traded at the same point Thursday.
The Russell 2000 index, the barometer of smaller company stocks, slipped 0.49, or 0.1 percent, to 434.39.
Overseas markets were mixed Friday. Japan's Nikkei stock average finished the day up 0.4 percent. France's CAC-40 closed up 0.1 percent, Britain's FT-SE rose 1.1 percent, but Germany's DAX index fell 1.1 percent.
Reuters and the Associated Press contributed to this report.