NEW YORK (AFX) -- U.S. stocks ended sharply higher Friday after a weaker-than-expected jobs report improved the odds the Fed will stop raising interest rates sooner rather than later, catapulting the Dow Jones Industrial Average and the S&P 500 Index to multiyear highs.
Friday's rally wrapped up a week of solid gains for the markets, buoyed by a pullback in oil prices, a strong first-quarter earnings season and data showing the resilience of the U.S. economy in the face of rising energy costs. Solid sales for retailers in April also reassured investors that the consumer is still spending even as higher gasoline prices eat into disposable income.
The Dow industrials rose 138.88 points, or 1.2%, to 11,577.74.
The benchmark index posted its biggest one-day gain in more than two weeks and ended at its best level since Jan. 14. On the week, the Dow rose 1.9%.
The Nasdaq Composite Index climbed 18.67 points to 2,342.57. The tech-rich index posted a weekly gain of 0.9%.
The S&P 500 Index rose 13.51 points to 1,325.76. The broad gauge was up 1.2% on the week and closed at its best level since February 2001.
Stocks gained Friday after the Labor Department reported that U.S. nonfarm payrolls expanded by 138,000 in April, less than the 199,000 expected by economists surveyed by MarketWatch. The unemployment rate remained at 4.7%, as expected.
'The report as a whole is softer than expected,' said Philip Shaw, an analyst at Investec Securities. 'It's not suggesting that the U.S. labor market is roaring away. Accordingly we've seen the dollar drop noticeably after the report, and bonds have made some gains.'
Shaw said the equities market liked the report because it offered some hope the Fed could ease up on its monetary-policy tightening. The dollar, which fell on the data, is another positive for stock investors, said Shaw. A weak dollar makes exports of U.S. goods cheaper and increases the value of repatriated corporate earnings.
On a less positive note for the outlook on interest rates, average hourly earnings increased 0.5% to $16.61, more than the 0.3% forecast by economists. Earnings are up 3.8% in the past year, the biggest year-over-year gain since August 2001.
On the broader market for equities, advancers outpaced decliners 3 to 1 on the New York Stock Exchange and 19 to 11 on the Nasdaq.
In a broad-based rally, brokers , oil services , biotech , utilities and residential builders posted some of the session's biggest gains.
Volume was 1.68 billion on the Big Board and 1.98 billion on the Nasdaq.
Employment report filters through markets
The U.S. dollar slumped to fresh one-year lows versus the euro, British pound and Swiss franc, and to a seven-month low versus the yen, as the weaker-than-forecast employment report raised the perceived likelihood of the Federal Reserve putting a temporary halt to its cycle of interest-rate increases.
On the bond market, long-term Treasury prices rallied, sending yields lower after the economic data. The benchmark 10-year note ended up 11/32 at 95 10/32, with its yield at 5.11%.
Gold futures climbed as much as $10 an ounce to touch levels not seen in nearly 26 years, while copper set a record as tight supplies, worries about the nuclear standoff with Iran and fresh weakness in the U.S. dollar combined to boost demand.
Gold for June delivery closed up $7.80 at $684.30 an ounce in trading on the New York Mercantile Exchange, backing off an early high of $687. Copper ended up 1.4 cents at $3.4935 a pound, having earlier set a new record of $3.555.
After losing more than $2 a barrel in the previous session, crude-oil futures held their ground around $70 a barrel, with anxiety over Iran and other trouble spots offering support. Crude for June delivery ended up 25 cents at $70.19, but fell more than 2% on the week.
Buffett on M&A trail
Berkshire Hathaway gears up for its annual meeting this weekend, with The Wall Street Journal suggesting its famous chairman, 75-year-old Warren Buffett, may use the meeting to announce a number of acquisitions. In his annual letter to shareholders earlier this year, Buffett made it clear he was looking for attractive buys to put his company's $40 billion cash pile to work.
'If you have a business that fits, give me a call,' he wrote. 'Like a hopeful teenage girl, I'll be waiting by the phone.'
The Wall Street Journal, citing unnamed analysts, named San Francisco power company PG&E and Los Angeles automotive insurer Mercury General as possible acquisition targets. A PG&E spokesman declined to comment, while Mercury General Chairman George Joseph -- who's nine years older than Buffett -- told the paper he hadn't been approached by anyone at Berkshire. PG&E shares were up 3.4% at $40.80, while shares of Mercury General climbed 3.6% to $57.52.
Other stock standouts
Toll Bros. rose 4.1% to $30.85 even after the luxury builder reported a 29% decline in the value of signed contracts and cut its new-home-delivery estimate for the year by 200. Chief Executive Robert Toll, however, maintained that excess supply in the market was a short-term phenomenon.
El Paso surged 12.5% to $15.18 after the energy firm reported first-quarter earnings that tripled and topped Wall Street forecasts.
Shares of Warner Music , which earlier in the week spurned a $4.2 billion takeover offer from EMI Group, were up 2.3% at $29.40 after the company posted a narrower-than-expected loss. This story was supplied by MarketWatch. For further information see www.marketwatch.com.