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Stocks end sharply higher on jobs data; S&P halts 5-day losing streak

U.S. stocks finished sharply higher on Friday, with the S&P 500 bouncing back from a five-session drop, as an upbeat November jobs report had the jobless rate falling to a five-year low and a read on consumer confidence hit a five-month high.

"It sounds like the market is getting to good news is good news, not bad news," said Phil Orlando, equity market strategist at Federated Investors.

The nonfarm payrolls report was "excellent, across the board. I really can't find a hole in this. We're now looking at a four-month average of just over 200,000," said Orlando.

And, the rise in sentiment "has positive implications on the potential for getting a better Christmas than we thought a few weeks ago. Consumer spending accounts for 70 percent of GDP, and with Christmas spending underway, this reading is critically important," Orlando added.

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Halting a five-session losing streak, but recording its first weekly loss in nine, the Dow Jones Industrial Average jumped 198.69 points, or 1.3 percent, to 16,020.20. All of its 30 components gained. The blue-chip index finished 0.4 percent lower for the week.

The S&P 500 also rallied, and briefly turned positive for the week, with industrials and consumer staples fronting gains that extended to all 10 of its major industry groups. It too posted its first weekly hit in nine, ending with a 0.04 percent loss from last Friday's finish.

The Nasdaq' gained 29.36 points, or 0.7 percent, to 4,062.52, up 0.06 percent from the week-ago close.

The dollar edged lower against currency rivals and the 10-year Treasury yield shed 2 basis points to 2.86 percent, after leaping to 2.9 percent in the immediate aftermath of the jobs report.

Gold futures fell $2.90, or 0.2 percent, to $1,229 an ounce; crude futures gained 27 cents, or 0.3 percent, to $97.65 a barrel.

The CBOE Volatility Index (VIX), a gauge of investor uncertainty, fell below 14.

For every stock falling, nearly three advanced on the New York Stock Exchange, where 671 million shares traded. Composite volume surpassed 3.1 billion.

The government's jobs report found 203,000 jobs were added in November, with the jobless rate falling to 7.0 percent. Analysts polled by Reuters had expected that 180,000 jobs were created last month, with unemployment marginally lower at 7.2 percent.

"It was a really good jobs report. There were a lot of positives in there. Manufacturing jobs are at their best level in over a year. Construction jobs being higher again is always good for the economy," said JJ Kinahan, chief market strategist at TD Ameritrade.

But Kinahan did not think the data moved any cuts in stimulus by the Federal Reserve into December.

"We do have this Fed meeting coming up, but that's right over the Christmas holidays. It would be odd timing," he said.

Federated's Orlando had a slightly different take, saying it's a certainty that the Fed will start cutting its asset purchases at one of the next three Federal Open Market Committee meetings, and which one is just a question of splitting hairs.

"Does the Fed taper in December? The answer is maybe. There are two things that might hold them back; the move in inflation went the wrong way, and they are concerned about deflation, and the fact we didn't have a 200,000-plus (jobs) number in each of the last four months," said Orlando.

That said, "we absolutely believe the Fed will commence the taper at some point in the next three to four months. Our base case is that March is probably the most likely time. But given the strength of the number here, you can't rule out late January or mid-December," he added.

Data on Thursday showed the economy grew faster-than-expected in the third quarter, fueling fears the Fed could start tapering before year ends, rather than in first quarter 2014.

On Friday, stocks furthered their gains after The Thomson Reuters/University of Michigan's preliminary reading on consumer sentiment came in at 82.5 in December, beating expectations.

In corporate news, American Eagle Outfitters forecast current-quarter profit under expectations, with the teen-apparel retailer citing holiday discounts. Its shares fell sharply.

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