Stocks closed out a week that began with a wicked selloff and turned to a historic move higher on a fairly quiet note.
The major averages ended positive, following tumult that saw a major accounting change and the indexes posting gains not seen in more than 70 years.
Bank stocks pared their losses after spending the morning lower, a day after critical changes to accounting rules known as mark-to-market lifted the entire market. Internet companies helped lead a late-afternoon bounce that saw the Nasdaqtech barometer close with a more than 1 percent gain and the Standard & Poor's 500break the 840 technical barrier.
Sobering news on employment and a lower reading in business activity had sent stocks negative earlier, but volume was anemic through the day and the averages moved little after noon. Data showed the economy shed 663,000 jobs in March and the unemployment rate climbed to 8.5 percent.
The Dow Jones Industrial Average has posted post its biggest four-week gain in 75 years as analysts are talking about an end to the bear market.
"Short- to intermediate-term I'd have to say I'm probably positive," said Matthew Tuttle, president of Tuttle Wealth Management in Stamford, Conn. "The numbers are ugly but everyone expected them to be ugly--they're not uglier than we thought they were going to be. At least in the short to intermediate term we probably have seen a low."
Some pullback from the week's high was expected Friday as profit-takers recovered some of the massive losses the market has seen in the past 18 months.
"I think the rally got a little ahead of itself here," Art Cashin, director of floor operations at UBS, told CNBC. "There are certain aspects about this that still say, 'bear market rally.' It was heavily led by the most-shorted stocks."
Technology showed the most strength as the broader market struggled.
Research in Motion surged after the BlackBerry manufacturer beat analyst expectations for quarterly earnings and raised its guidance for the year.
Pharmaceuticals dragged on all three major averages, with Bristol-Myers Squibb leading the sector lower after an analyst cut his rating on the stock on dimming prospects that the company would be bought.
Analyst Tim Anderson of Bernstein Research downgraded Bristol-Myers shares to "market perform" from "outperform" also on sentiment that the company's stock was overpriced.
In addition to the unemployment gains, the Institute for Supply Management said its non-manufacturing index dropped to 40.8 last month from 41.6 in February.
A measure of employment in the sector fell sharply to 32.3 from 37.3. That reading confirmed what many already knew: the labor market is hurting badly and shows little sign of healing.
"This is where a lot of the problems with the financials and the banking sector are showing up," said Gary Thayer, senior economist at Wachovia Securities in St. Louis, Mo. "The economy is still very weak and we probably have more adjustment to go through."
Bank shares were largely lower as trading progressed, though Royal Bank of Scotland was among the day's biggest gainers after the company said it was cutting jobs and acknowledged mistakes made in its 1987 acquisition of ABN Amro.
Google shares gained as the search engine giant is reportedly in talks to buy the trendy blogging site Twitter. Sources told the TechCrunch blog that the price could be $250 million.
Meanwhile, International Business Machines is finishing up its $3 billion purchase of Sun Microsystems. Sun shares gained as the deal wound to a close.
But Walt Disney faced troubles after a downgrade from JPMorgan sent shares lower and put the stock among the worst Dow performers.
Hewlett-Packard and General Motors led Dow gainers.
The sideways trade off the unemployment numbers raised some concern over whether the market was overbought and needed a pullback.
Despite the aggressive governmental intervention, there were still visible weak spots in the economy that had some investment professionals wondering if the week's enthusiasm was unwarranted.
"I don't trust this market at all,. It's concerning that it's not pulling back more after yesterday's run-up," said Kathy Boyle, president of Chapin Hill Advisors in New York. "I don't think we're off to the races yet. I don't think we're going to know of any of these things work for a while."
Blockbuster saw its beaten-down shares gain after the company said its revolving and term loan agreements had been amended to give it more breathing room to make debt payments.
But Northrop Grumman shares fell after the company agreed to pay $325 million to settle allegations it sold the National Reconnaissance Office defective military satellite parts.
Elsewhere in government, Congress has approved President Obama's $3.6 trillion budget that includes massive spending increases in health care, education and energy.
In other markets, copper futures rose above $2 a pound for the first time since November as fund managers began moving back into the metal. At the same time, Treasury prices continued to fall as risk appetite gained, sending the 10-year note a full point lower.
Market breadth was positive, with gainers beating losers 2 to 1 as 1.48 billion shares changed hands on the New York Stock Exchange.
-- Reuters contributed to this report.