Stocks ended positive, with the Nasdaq reaching a three-year high, despite a disappointing employment report as investors found comfort in other economic news and in expectations the jobs figures would push the Federal Reserve to continue efforts to stimulate the economy.
The Dow Jones Industrial Average rose 19.68 points, or 0.2 percent, to close at 11,382.09 For the week, the Dow rose 2.62 percent. With Friday's gain, the Dow rose 3.42 percent in three days, following strong moves higher the previous two sessions.
Caterpillar was the best performer on the Dow for the week, rising more than 6 percent, while Cisco was the worst performer, falling more than 2 percent.
The S&P 500 gained 3.18 points, or 0.3 percent, to close at 1,224.71. For the week, the S&P 500 rose nearly 3 percent. In the last three days, the S&P gained 3.74 percent.
The tech-heavy Nasdaq closed at 2,591.46, its highest close in nearly three years, since January 3, 2008. On Friday, the index rose 12.11 points, or 0.5 percent, to close at 2,591.46. For the week, the Nasdaq rose 2.24 percent. In the last three days, the Nasdaq gained 3.73 percent.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell to 18.
All key S&P sectors rose Friday, led by materials, energy and financials.
The dollar fell more than 1 percent against a basket of currencies, a move that typically lends support to stocks. Gold meanwhile, soared to close at $1,405 an ounceas investors flocked to the safety of precious metals, while the Commodities Research Bureau Index rose 1.3 percent.
Gold miners including Newmont Mining , Gold Fields and Barrick rose more than 2 percent each.
The jobs reportinitially took the wind out of the early December rally, which saw the market nearly return to November's highs in two days of trading, but by the end of the session, stocks clawed back.
The unemployment report "is kind of a blow as we head into the end of the year, definitely," Dan Cook, chief executive of IG Markets told CNBC. "We’re not even staying above water at this point."
Cook noted that the long-term unemployment rate was unchanged at 17 percent, meaning there will be "still be a lot of structural unemployment."
The disappointing result likely means the Federal Reserve will continue with plans to boost the economy through long-term bond purchases, a policy known as quantitative easing, Cook said. (Read more: Bulls Believe Decline will be Muted).
As a result, the markets may not react that strongly to the number. Typically, the market usually ends modestly up or down on the day of an employment report, even when the number is surprisingly bad, he added.
"We usually see a lot of quick moves and some profit taking, and it gets settled out at the end," Cook said.
While there will likely be selling pressure in the market throughout the day, traders may be expect the disappointing number may open up a conversation about "QE3," said Todd Schoenberger, managing director LandColt Trading, referring to a third round of long-term bond purchases by the Fed.
Two other reasons the market may find support: the disappointing number may lead Congress to extend jobless benefits for the unemployed, and may lead to a deal on extending the Bush-era tax cuts, Schoenberger said. Specifically, investors need to know how the capital gains rate will be affected. If the rate is raised, investors who made money in the recent stock market rally may need to sell, he said.
"Today’s data may be just enough fuel to get everybody to the table to agree," Schoenberger said.
On the tech front, Apple shares slipped even after brokerage
Broadcom fell after
STMicroelectronics jumped after BNP Paribas raised the chipmaker to "outperform" from "neutral."
And Google signed a contract to buy one of the largest office buildings in Manhattan for more than $1.8 billion, according to two real estate executives who have been briefed on the deal.
In the retail sector, Phillips-Van Heusen bucked the trend and reported a lower profit, due to the apparel company's acquisition of Tommy Hilfiger.
Walgreen's rose after the drugstore chain reported a 3.2 percent boost in same-store sales for November, thanks in part to stronger pharmacy sales.
But Big Lots fell after the retailer reported disappointing profits and a weaker-than-expected outlook. The firm suffered from competition and a rise in debt-card processing fees. Rivals Dollar General was up slightly while Wal-Mart slipped.
Ebay , meanwhile, fell after Citigroup downgraded the online auction site to "hold" from "buy," noting that shares in the company have rallied significantly.
Cascade jumped after news that demand for forklift attachments and other products boosted profit for the maker of parts for the lift truck industry.
Sunoco fell after news it would sell its Toledo, Ohio refinery for $400 million to PBF Holding, a private-held energy investment fund.
Walter Energy , meanwhile, rose after news the company will buy Canadian firm Western Coal for $3.3 billion. The acquisition would create the world's leading producer of metallurgical coal, which is used by steel companies.
Oil prices pared losses and turned positive, trading near $89 a barrel.
In Washington, a plan to cut the deficit developed by a panel appointed by President Obama fell short of votesto pass.
In the day's economic news, the services sector grew more than expectedin November, according to the Institute for Supply Management. Factory orders, meanwhile, fell 0.9 percent in October to a seasonally adjusted $420 billion, indicating a broad decline in the manufacturing sector, according to the Commerce Department.
Nonfarm payrolls gained only 39,000 in November, far less than the 140,000 forecasted by economists surveyed by Reuters, according to the U.S. Labor Department. Private payrolls rose by 50,000, also less than expected.
Employment for September and October was revised to show 38,000 more jobs were created in those months than previously estimated.
While the jobs number was bad, not all economists believes it may not mark an end to better economic news (Read more: Jobs 'Shocker' Not so Shocking).
European shares ended lower as the U.S. jobs report added to concerns over the ongoing debt crisis. Standard & Poor's said it may downgrade the debt rating of Greece depending on the rules attached to the country's recent bailout.
Asian indexes ended mixed after news reports suggested China could be set to continue its tightening of monetary policy.
In other news, the Federal Reserve's $600 billion bond buying program can be adjusted if necessary and will be subject to regular reviews, according to top Fed officials.
On Tap Next Week:
MONDAY: Employment trends index, Richmond Federal Reserve President Lacker speaks, UN Climate Conference, MetLife shareholder meeting; before-the-bell earnings from Dollar General.
TUESDAY: Bank of Canada announcement, IBD/TIPP economic optimism index, three-year Treasury note auction, consumer credit, API weekly report, Ireland budget announcement, 3M investor meeting; before-the-bell earnings from AutoZone, BMO Financial and Vail Resorts; after-the-bell earnings from H&R Block and Novellus.
WEDNESDAY: McDonald's November sales, MBA mortgage applications, quarterly services survey, 10-year Treasury note auction; before-the-bell earnings from United Natural Foods.
THURSDAY: BOE announcement, jobless claims, wholesale inventories, 30-year Treasury bond auction, DuPont investor day; before-the-bell earnings from Costco and Lululemon Athletica; after-the-bell earnings from National Semi.
FRIDAY: International trade, import and export prices, consumer sentiment, and Treasury budget.
More From CNBC.com: