Stocks ended off the highs of the day as technology slumped, but a surprisingly strong jobs report gave a lift to the market as it ended higher for a second straight week.
The Dow Jones Industrial Average rose 56.99 points, or 0.5 percent, to close at 12,376.72. The blue-chip index gained 156.13 points, or 1.3 percent, this week, and was up for the second week in a row, rising 4.37 percent.
Caterpillar rose the most on the Dow for the week, gaining nearly 3.7 percent for the week, while Hewlett-Packard fell the most, losing 3.65 percent.
The S&P 500 rose 6.58 points, or 0.5 percent, to close at 1,332.41. For the week, the S&P rose 18.61 points this week, or 1.4 percent. The S&P 500 has risen 4.2 percent over the last two weeks.
AT&T rose the most on the S&P Index this week, gaining more than 6 percent, while Apple fell the most, losing nearly 2 percent.
The Nasdaq gained 8.53 points, or 0.3 percent, to 2,789.60 on Friday. For the week, the tech-heavy index gained 46.54 points this week, or 1.7 percent. The Nasdaq has risen 145.93 points, or 5.5 percent, in the past two weeks.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 18.
Among key S&P sectors, industrials and consumer staples gained, while technology and telecom fell.
While some investors don't expect the strong showing from the beginning of the year to extend through April, Ryan Detrick, senior technical analyst at Schaeffer's Investment Research points out that April has proven to be a very strong month for the last five years, posting returns of more than 4 percent.
"We would not be shocked if we have an upward surprise in earnings season, and that could be a major catalyst to higher prices in April," Detrick sad.
Another technical point in the market's favor: when the S&P 500 rises more than 5 percent in a quarter (like it just did), it's very bullish for April as well as the rest of the year, according to Schaeffer's research, which notes that this has happened only four times since 1987. In these instances, the S&P 500 averages a return of more than 16 percent for the rest of the year, Schaeffer said.
The payrolls report—showing a gain of 216,000 jobs in March and a decline in the unemployment rate to 8.8 percent—comes against a backdrop of stronger economic growth, even in the face of rising oil prices, said Timothy Speiss, chairman of Personal Wealth Advisors for EisnerAmper.
"I would say unemployment numbers should continue to trend downward unless gasoline prices approach $4," Speiss said.
The fact the unemployment has already come down to 8.8 percent from 10.1 percent in 2009, is great news, he added.
"It’s not happening fast enough for people," Speiss said, but added he expects the rate with get down to the low 8s by the fall. And that should start to boost housing, one sector of the economy that's lagged, he said.
"If you have declining unemployment, you should see an impact in home acquisitions and reduced foreclosures," Speiss said. "And if you see that occur, then housing prices should start to stabilize."
The number is in line with continuing drops in jobless claims, and a strong private sector payrolls report from ADP on Wednesday.
The strong payrolls report is increasing talk among market participants over when the Federal Reserve will exit its monetary stimulus and when it might raise interest rates.
"Here's the conundrum for traders: As terrific as today's number is, it could also be a reason to worry the Fed will seriously consider an early withdrawal of QE2 and begin talk of higher rates to 'slow the recovery,'" said Todd Schoenberger, managing director of LandColt Trading. "If this happens, then investors will have to refocus their attention to quarterly earnings, which could turn out to be a mixed bag and, therefore, result in a very volatile April for equities."
In fact, the prospect of rising rates is already on the horizon. Richmond Fed President Jeffrey Lacker told CNBC that he "wouldn't be surprised" if the central bank raised interest rates before the year-end.
Raising interest rates and ending asset sales is warranted this year because of concerns about inflation and a need to "normalize interest rates" as the economy improves, said Lacker. But he gave no timetable for the rate hikes or other actions.
On Thursday, Minneapolis Federal Reserve President Narayana Kocherlakota told the Wall Street Journal that the Fed could raise rates by three-quarters of a percentage point by the end of the year.
Oil prices continued to surgeon Friday as the rebels lost ground in Libya. U.S. light sweet crude closed above $107 a barrel, after gaining 16 percent in the first quarter and 2.41 percent this week, while London Brent crudeclosed above $118, after gaining nearly 24 percent in the first quarter and 2.7 percent this week.
In deal news, Nasdaq OMX and InterContinentalExchangeput forth a rival bidto buy NYSE Euronext for about $11.3 billion in cash and stock. The offer is valued at $42.50 per share, a premium of 19 percent to the price proposed by Deutsche Boerse.
Meanwhile, GM U.S. sales for March rose 11.4 percent compared to a year ago. However the figures were less than expected, implying the auto industry recovery may hit a bump in the road with higher gas prices. Rival Ford outsold GM for the second time since 1998 as total sales rose 19.2 percent.
Toyota traded flat after reporting its March sales in the U.S. fell 5.7 percent from a year ago, while Nissan also was flat after reporting a 27 percent boost in March sales.
JPMorgan downgraded the consumer discretionary sector to "neutral" from "overweight," saying this "short-term" downgrade reflects the fact the sector has been "structurally weaker" for awhile. According to JPMorgan, economic momentum is slowing and the sector as a whole has high valuations.
Still, the consumer discretionary sector was higher, led by Wynn Resorts and H&R Block .
JPMorgan also named stocks it liked in what it determined are the top 25 industries, as well as those it didn't. Among those on the favored list were the airlines Delta Airlines and UAL; health care companies Medco Health Solutions and Life Technologies Group; biotech companies Amgen and Gilead, insurers Aetna and Cigna and Home Depot.
Those the brokerage shunnedincluded Navistar , Principal Financial Group and Valley National .
Coca-Cola shares rose after the beverage giant won the dismissal of a lawsuit accusing it of deceiving consumers into believing its Diet Coke Plus drink is healthy.
Meanwhile, rival PepsiCo will soon be offering a mid-calorie version of its Pepsi-Cola soft drink, called Pepsi Next, according to an industry publication.
American Apparel sank after the clothing chain said it may file for bankruptcyand might even have to liquidate, if it does not get enough money to keep running.
Office Depot dropped after the office supply retailer said it will restate its finances for the second and third quarters as well as for the full year. In addition, S&P equity cut its price target on the firm to $3.5 from $5.
Logitech International plunged more than 17 percent after the computer-mouse maker trimmed its 2011 sales and profit forecasts.
Semiconductors have especially been under pressure. Intel slipped after Macquaire Equities Research cut its near-term earnings estimates on the Dow component on concerns of "weaker-than-expected builds" in the first quarter. Rivals Nvidia and AMD also slid.
David Sokol’s surprise resignationas one of Berkshire Hathaway’s top executives continues to raise questions. Sokol's Lubrizol purchases, made before Warren Buffett company announced a proposed takeover of the chemicals company, have come under scrutiny.
Gold pricesended relatively flat for the week, rising just 0.13 percent to close at 1,428.10. The dollar , meanwhile, traded flat against a basket of currencies.
In other economic news, the Institute for Supply Management's index fell slightlyto 61.2 in March from 61.4 in February. Construction spending, meanwhile, fell 1.4 percent.
European shares closed higher after the U.S. jobs report. The pan-European FTSEurofirst 300 index rose about 1.5 percent. Portugal was in focus once against after its sold 1.65 billion euros in an extraordinary bond auction.Yields rose, but less than expected. Separately, the country has announced it will hold a general election on June 5.
The crisis in Japan continues. A Japanese newspaper reported Friday that Japan will take control of Tokyo Electric Power, the operator of a stricken nuclear plant, in the face of mounting public concerns over the crisis and a huge potential compensation bill, Reuters said.
On Tap Next Week:
MONDAY: Lockhart speaks, Bernanke speaks, Larry Page takes over as Google CEO.
TUESDAY: ISM non-manufacturing index, FOMC Minutes; Lockhart speaks, Kocherlakota speaks, Plosser speaks; earnings from KB Home before-the-bell.
WEDNESDAY: Weekly mortgage applications oil inventories, Treasury STRIPS; Earnings from Monsanto before-the-bell and Bed Bath & Beyond after-the-bell.
THURSDAY: Monthly chain-store sales, Bank of England Announcement, European Central Bank announcement, jobless claims, consumer credit, money supply; Lacker speaks; earnings from Constellation Brands before-the-bell and Rite Aid after-the-bell.
FRIDAY: Wholesale trade.
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