Stocks Welcome Strong Jobs Report, Intel Outlook

Stocks rose across the board Friday as a better-than-expected employment report indicated the economic recovery is firmly on track, while Intel Corp.'s (INTC) positive outlook lifted the technology sector.

The Dow Jones industrial average (search) rose 46.91 points, or 0.46 percent, to 10,242.82. The Standard & Poor's 500 Index (search) gained 5.87 points, or 0.53 percent, to 1,122.51. The technology-focused Nasdaq Composite Index (search) added 18.36 points, or 0.94 percent, to 1,978.62.

For the week, the Nasdaq slipped 0.41 percent, while the Dow rose 0.54 percent and the S&P 500 added 0.16 percent.

According to the Labor Department (search), the economy added 248,000 jobs in May, and the unemployment rate held steady at 5.6 percent. Payroll figures from March and April — already impressive — were revised upward as well.

The latest payroll figures illustrated continued strength in job creation, a key piece of the economic recovery that had been lagging coming into 2004. With more than 1 million new jobs in the last three months alone, investors were assured of the economy's ability to continue growing.

"This is a very Goldilocks number — not too hot or too cold. It was just what we needed," said Chris Wolfe, global head of equities for J.P. Morgan Private Bank. "It lets us contend with the other issues in June with a fairly strong economy behind us."

Most on Wall Street expect the Fed to raise interest rates by a quarter-point at its June 29-30 meeting, after the solid employment report.

The markets got a boost as crude oil futures ended down 2.1 percent at $38.45 a barrel on the New York Mercantile Exchange (search), settling below $40 for the third consecutive day, in a sell-off after OPEC's agreement to raise output quotas and a rise in U.S. crude and gasoline inventories.

"Oil down 2 percent is certainly helping equities worldwide," said Tom Schrader, managing director of U.S. equity trading at Legg Mason Wood Walker. "The fact that our economic numbers came out stronger than expected is helping equities here in the United States. Intel's comments last night after the bell are helping the tech market, which is helping the broader market."

The lower oil prices helped oil-sensitive stocks like airlines. Delta Air Lines Inc. (DAL) rose 5 cents to $5.76 and Southwest Airlines (LUV) added 26 cents, or 1.7 percent, to $15.60.

Intel, the world's largest computer chip maker, added to the optimism with a forecast late on Thursday that second-quarter revenue may be better than previously expected. Intel led stocks higher, rising 73 cents, or 2.7 percent, to $28.14.

Semiconductor maker Texas Instruments Inc. (TXN) and networking equipment maker Cisco Systems Inc. (CSCO) were up after Intel's report. Texas Instruments rose 87 cents, or 3.6 percent, to $25.21 and Cisco added 43 cents, or 1.9 percent, to $22.78.

The Philadelphia Stock Exchange semiconductor index was up 1.6 percent.

General Mills (GSI) rose $2.20, or 4.8 percent, to $47.85 on reports that the food company may be the target of a $22 billion bid by Nestle SA. Nestle has no plans for a major transaction, its chief executive said early Friday.

Wal-Mart Stores Inc. (WMT) shares slipped after the largest U.S. private-sector employer promised to give raises to some of its workers, including 1.3 million U.S. employees. The world's biggest retailer called on employees to counter critics who say Wal-Mart mistreats its staff. Its shares fell 1 cent to $56.69.

Computer Associates International Inc. (CA) gained 87 cents to $27.17 after the company announced that former chairman and chief executive Sanjay Kumar, who had stayed on as chief software architect, will leave the company altogether. Computer Associates is mired in criminal investigations of its accounting practices.

Kmart Holding Corp. (KMRT) said it will sell as many as 24 stores to The Home Depot Inc. (HD) for up to $365 million in an attempt to shed underperforming stores. Kmart surged $7.67, or 14 percent, to $62.53, while Home Depot slid 15 cents to $35.33.

Trading was light, with 1.12 billion shares changing hands on the New York Stock Exchange, well below the 1.4 billion daily average for last year. About 1.41 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year.

Advancers outnumbered decliners on the NYSE and Nasdaq by 2 to 1.

The Russell 2000 index of smaller companies gained 5.31, or 0.9 percent, to 567.75.

Overseas, Japan's Nikkei stock average rose 0.9 percent. In Europe, Britain's FTSE 100 closed up 0.4 percent, France's CAC-40 was up 1.2 percent for the session and Germany's DAX index rose 1.1 percent.

Reuters and the Associated Press contributed to this report.