Stocks gained Friday as retailers and tech sectors gained strength and traders shrugged off a tepid jobs report to keep the major indices above key benchmarks reached earlier this week.
The Dow Jones Industrial Average rose more than 25 points and was on track for the best weekly gain in more than two months, a day after the blue-chip index ended at another 2 1/2-year high.
Kraft and Procter & Gamble led blue-chips higher, while JPMorgan and General Electric fell.
The S&P 500 traded flat up slightly, and was also on track for the best weekly gain in two months. The tech-heavy Nasdaq also rose, and was on track to post the best gain in five months. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 17.
Among key S&P 500 sectors, utilities, energy and financials fell, while technology rose.
The dollar gained against a basket of currenciesas the euro fell, and the price of gold rose to close at $1,348.30 an ounce. Copper, meanwhile, reached an all-time high.
Oil prices fell as the dollar gained and on an unfounded report that the Egyptian government would be making an announcement regarding Mubarak's future. U.S. light crude fell to $89.03 a barrel and Brent crude fell to $99.83 a barrel.
Early on Friday, the government reported a slight 36,000 gain in January nonfarm payrollsand at the same time, a drop in the unemployment rate from 9.4 percent to 9 percent.
While the market traded in a narrow range much of the day, prices started to move higher in the afternoon.
Investors realized the "economy is stronger, profits are better, and earnings season is good, with a lot of companies meeting or beating expectations," said Benny Lorenzo, chairman and CEO at Kaufman Brothers.
"That thinking started to take more of a dominant position," Lorenzo said.
Among the strongest performers were tech stocks, led by semiconductors. The iShares PHLX SOX Semiconductor Sector Index rose about 1.75 percent Friday, adding to gains exceeding 12 percent for the year.
One boost to semiconductors came from Bank of America Merrill Lynch, which re-instated coverage of the sector with a bullish stance on revenue growth, saying it prefers companies that can take advantage of growth in smartphones and tablets, broadband, and cloud computing. As a result, BofA is less excited with companies geared to personal computing, such as AMD and Intel, which get "neutral" ratings from the brokerage. Texas Instruments, Broadcom and Nvidia received "buy" ratings.
JDS Uniphase also lent support to the tech sector. The optical component maker posted surprisingly strong results thanks to demand for more bandwidth in smartphones and tablets. At least nine brokerages raised their price targets for the stock. Rivals Finisar , Oclaro and Opnext also gained.
For much of the day, the market barely reacted to the job news as traders attempted to digest what the conflicting numbers between jobs gained and the unemployment rate meant.
The fact the market didn't sell-off could be a bullish sign, said Dan Cook, CEO at IG Markets.
"Typically when people get confused, we’ll see more intense profit taking," Cook said. "We had some, but it was short-lived, with no follow-through."
Consumer discretionary and consumer staples sectors performed better than most other stocks on Friday, in the wake of strong January retail sales reports delivered Thursday. But Cook said he suspects the strength in retail sales is driven by the top 20 percent of wage earners in the country.
"I do think we’re not seeing the broad recovery in consumer spending yet," he said.
The top gainers among retailers ranged from Big Lots to Nordstrom's . Abercrombie & Fitch , GameStop and Urban Outfitters also advanced.
Consumer staples stocks also fared well. Clorox gained after reporting a 3 percent drop in sales early Friday, in line with what the consumer products company had expected. And Kellogg rose after reporting a 7.4 percent gainin fourth quarter profit. RBC raised the cereal maker's price target to $55 a share from $49, and BMO raised Kellogg's rating to "outperform" from "market perform."
The rise in the dollar and fall in the price of oil, meanwhile, pressured materials and energy stocks. Among materials, steel producers AK Steel and US Steel led decliners, while oilfield services companies Halliburton and Baker Hughes , led energy stocks lower.
Aetna reported earnings that easily beat analyst estimates. The insurance leader also boosted its outlook and increased its dividend, sending shares soaring.
In corporate news, Verizonhalted pre-ordersof Apple's iPhone online after less than one day, after what it said was "the most successful first day sales in the history of the company."
Meanwhile Research In Motion gained after Morgan Stanley upgraded the maker of the Blackberry to "equal weight" from "underweight" and citing growth in the market for smart phones and a rise in international sales of the Blackberry. National Bank Financial, meanwhile, started the company with an "outperform" rating.
In further earnings news, Coinstar sharesplummeted in after-hours trading after the company announced a weaker than expected outlook for the first quarter.
Pulte Group gained despite reporting widening losses due to charges and and a drop in closings and new orders, as investors focused on the company's views that the housing market seems to be stabilizing.The news failed to help other homebuilders, which traded lower, including KB Home , DR Horton , and Hovnanian Enterprises .
And Fortune Brands gained after beating profit expectations, and saying its plans to separate into three companies remains on track.
While more than half the companies in the S&P 500 have reported earnings, several more are on tap next week, including Dow components Cisco , Coca-Cola , Kraft and Disney .
Stocks also may not be trading off more despite the weak payrolls report because Treasurys sold off sharply, sending the yield on the 30-year Treasury bond to 4.7 percent, and the 10-year note to 3.65 percent, the highest yield since May 3, 2010.
The move was providing some evidence the 30-year bull-market in bonds may be coming to an end, said Tom Schrader, managing director for U.S. equity trading at Stifel Nicolaus Capital Markets.
Another reason for support in the equities markets was traders were focusing on revisions within the payrolls report and news that manufacturing jobs are gaining, he said.
Severe weather throughout the country may have caused a 32,000 drop in construction jobs and a 45,000 drop in courier and messenger jobs, the Labor Department said. The manufacturing sector offered some good news, adding 49,000 jobs. The overall 36,000 gain in January jobs was far less than the 145,000 analysts surveyed by Reuters had expected.
While the turmoil in Egypt remains a concern, it faded into the background as an issue for the markets on Friday, Schrader added.
Shares rose in Europe as banks rallied after signs that corporate lending is starting to pick up. Most Asian markets were closed due to Lunar New Year, but Japan closed up 1 percent.
On Tap for Next Week:
MONDAY: Employment trends index, consumer credit, FDIC discusses incentive based pay rules, Obama speaks to Chamber of Commerce; Earnings before-the-bell from Hasbro and Humana.
TUESDAY: NFIB small business index, Richmond Fed President speaks, Atlanta Fed President speaks, Dallas Fed President speaks, 3-year Treasury note auction; before-the-bell earnings from Toyota and UBS; after-the-bell earnings from Disney, McAfee and Take Two.
WEDNESDAY: Weekly mortgage applications, oil inventories, 10-year Treasury note auction, Bernanke testifies before U.S. House, Fannie/Freddie reform hearing, AmEx analyst meeting, HP announces new mobile strategy, Moody’s briefs on sovereign debt ratings; before-the-bell earnings from Coca-Cola, Nissan; after-the-bell earnings from Cisco, Activision Blizzard, MetLife, Prudential and WholeFoods.
THURSDAY: BoE announcement, jobless claims, wholesale trade, Atlanta Fed speaks, 30-year Treasury bond auction, Treasury budget, Ebay investor day, Verizon iPhone goes on sale; before-the-bell earnings from PepsiCo, Philip Morris and Sprint; after-the-bell earnings from Kraft and Expedia.
FRIDAY: International trade, consumer sentiment, Nokia analyst day; earnings from Discovery Communications.
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