Stocks rose Friday as Wall Street breathed a sigh of relief after the stress-test results and banks rallied.
"[W]hat happened is, we priced a Great Depression and we got a deep recession," Jim O'Shaghnessy of O'Shaughnessy Asset Management, told CNBC. "I think the difference between that makes this a very sustainable market," he said, adding this is a "once-in-a-generation opportunity to get in at prices that haven't been as good since 1982."
The April jobs report cast a bit of a pall on the market as the headline number showed fewer jobs were lost in April than previously expected but the prior month's payrolls were revised to show a sharper drop than initially reported and the unemployment rate jumped.
Employers cut 539,000 jobsfrom nonfarm payrolls last month, fewer than the 590,000 expected, according to a Reuters survey. But economists noted that the headline number benefitted from the addition of 72,000 government jobs, mostly for the 2010 census. And, March payrolls were revised to show 699,000 jobs were lost, compared with the 663,000 first reported. The unemployment rate shot up to 8.9 percent, the highest since September 1983.
If you discount the boost from government census jobs, it's still better than the nearly 700,000 lost in March but "it is hardly a triumph or even a stabilization," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients.
The jump in unemployment is depressing wage gains, Shepherdson noted, which is "seriously bad news because without wage gains, people can't deleverage unless they cut spending deeply," he explained.
Joel Naroff of Naroff Economic Advisors used stronger language to describe how bad the report was.
“This is a truly awful report that will likely be taken as a good report because the job losses have slowed,” Naroff wrote.
Meanwhile, wholesale inventories fell for a seventh straight monthin March, dropping 1.6 percent to the lowest since November 2007. Economists had expected a more modest 1 percent drop, according to Reuters. Wholesale sales dropped 2.4 percent to their lowest level since November 2005.
Still to come: Richmond Fed President Jeffery Lacker will speak at 1 pm.
Bank stocks were mostly higher after the stress-test results showed 10 of the 19 tested were in need of additional capital, totaling $74.6 billion.
Bank of America was seen to be the most in need of funds, with a capital shortfall of some $33.9 billion. Citigroup, Wells Fargo, GMAC, Morgan Stanley and Regions Financial were also told to build their cash reserves.
Wells Fargo and Morgan Stanley issued stock offeringsthis morning.
Wells Fargo shares had opened lower but rebounded after the bank priced 341 million common shares at $22 a share raising $7.5 billion, more than expected.
Morgan Stanley shares dropped 5 percent after the bank priced 146 million shares of common stock at $24 a share, totaling $3.5 billion.
Oil will remain sharply in focus after the price of a barrel of New York light sweet crude hit a fresh high for the year near $57 during Thursday's session.
American depositary shares of Toyota fell after the Japanese automaker posted a quarterly loss of $6.9 billion, projected a much deeper-than-expected loss for the full year and cut its dividend.
Tech stocks declined, dragging the Nasdaq into negative territory, with the sharpest losses in chip stocks. Nvidia , Microchip Technology and Marvell Technology were among the biggest percent decliners on the Nasdaq.
Retail stocks also turned lower, even after Friedman Billings Ramsey raised its price target on several clothing retailers, including Abercrombie & Fitch , AnnTaylor and Pacific Sunwear .
Still to Come:
FRIDAY: Wholesale trade; Earnings from Berkshire Hathaway after the bell
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