Stocks Finish Week at New Highs on Economic Data, M&A

Stocks closed with broad gains on Friday after strong economic data and a late rally pushed the Dow and S&P 500 to new closing highs,

"We thought probably the dance music would probably slow down by now but with the wave of mergers and $2.5 trillion dollars cash on the sidelines, it looks like the party will go on for a while," said Fred Dickson, chief market strategist at DA Davidson.

The Dow Jones Industrial Average rose about 40 points, closing slightly off a new intraday record. The S&P 500 added to its recent closing high but remains well off an all-time intraday record of 1552.87 set in March 2000. The Nasdaq Composite traded

For the week, the Dow gained 1.2%, the S&P rose 1.4% and the Nadsaq continued its recent outperformance with a gain of 2.2%, logging its best weekly gain since March 24.

The monthly jobs report came in above Wall Street estimates. Investors were also encouraged by favorable manufacturing data and consumer sentiment, which also rose more than expected.

"What we're getting is very strong economic data," said Brian Gendreau of ING Investment Management. "Today's reports are about as good as they get. We had a strong employment report and strong ISM."

Breadth was solidly positive on Friday with gainers outpacing decliners by more than two to one on the NYSE. Basic materials stocks ended the day and the week as the best-performing sector, boosted by sharp gains in gold and silver on Friday. Energy stocks also moved higher, mirroring a sharp rise in crude oil prices.

Telecom stocks such as Verizon Communications and AT&T were notable laggards on Friday as the group fell 1.2%.

In corporate news, Dell rose after the computer maker posted strong quarterly earnings late Thursday and announced further job cuts as it attempts to return to profitability.

Wal-Mart Stores gained more than 4% and gave the Dow index a lift after the world's largest retailer said it authorized a $15 billion share buyback and announced plans to build 200 new supercenters, down from the 270 stores originally planned.

Brocade Communications Systems fell 7% after the data storage company reported a decline in quarterly earnings.

"Increased competition from Cisco and a slowed enterprise spending environment, particularly in storage, clouds visibility and begs a more neutral approach to the stock," wrote Goldman Sachs analyst Laura Conigliaro, in a client note.

Shares of J. Crew Group jumped 11.5% after the apparel company reported quarterly earnings of 39 cents a share, handily beating analysts' consensus forecast of 30 cents a share.

Treasury prices extended their losses on the strong economic data, sending yields to 11 month highs.

The Bancroft family, which controls about two-thirds of the voting shares of Dow Jones may now consider selling the publisher of the Wall Street Journal.

European Stocks Move Higher

European shares extended gains following the positive economic data in the U.S.

The London FTSE-100, Paris CAC-40 and Frankfurt DAX were all higher.

In corporate news, Zurich based reinsurer Swiss Re looked set to buy nearly $7.90 billion worth of U.K. life insurance liabilities from Swiss insurer Zurich Financial, the Wall Street Journal reported Friday.

Meanwhile, the future of ABN Amro's U.S. unit, LaSalle remained in the balance as the Dutch bank urgedBank of America and a Royal Bank of Scotland-led consortium to settle their dispute over the acquisition, the Financial Times reported Friday.

Asian Markets Rally

Asian stock markets extended gains in the afternoon session Friday, with South Korea closing at a fresh peak on the back of surging tech stocks.

South Korea's Kospi Index rose to finish at its fifth consecutive record as chipmakers such as Samsung Electronics rallied following a rebound in DRAM memory chip prices, while brokerages surged as trading volumes soar.

Japanese exporters were in favor, thanks to a soft yen, which help boosts the value of overseas sales. The U.S. dollar hit a three-month high against the yen after a Midwest
manufacturing index pointed to a revival in U.S. factory activity in May.

Tokyo's Nikkei 225 Average closed higher, briefly topping the 18,000 level for the first time in three months, as exporters such as Toyota Motor advanced after data showed an upbeat outlook for the U.S. economy, a key market for Japanese products. Shares of Itochu and other trading firms advanced after Morgan Stanley raised its share price targets for five of the industry's largest firms, citing strong earnings and attractive valuations.

Hong Kong stocks were mostly higher, stoked by the S&P 500's fresh record close, with investors relieved that the mainland A-share market appeared on a stable track. Hong Kong-listed China plays, or H shares, outperformed with a 2.2% gain, with life insurers strengthening after broker upgrades and coal plays rising further amid a positive outlook for the sector.