Stocks capped another strong week with a triple-digit rally Friday as Wall Street breathed a sigh of relief after the stress-test results and banks soared.
"[W]hat happened is, we priced a Great Depression and we got a deep recession," Jim O'Shaughnessy 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." (Watch the video.)
Stocks got an extra shot in the arm following news that AT&T is near a $2.5 billion dealto buy most of Verizon's Alltel assets.
The Dow Jones Industrial Average jumped 164.80, or 2 percent, to close at 8,574.65. The S&P 500 gained 2.4 percent, and the Nasdaq rose 1.3 percent.
For the week, all three indexes ended higher, with the Dow up 4.4 percent, the S&P up 5.9 percent and the Nasdaq up 1.2 percent.
The Nasdaq's weak showing should be a tipoff that there was sector rotation going on in the market: Financials and commodities gained, while tech and retail, which had been outperforming the market, were the weakest.
So, while some sectors pulled back, the broader market showed no signs of slowing: The Dow is up 30 percent in the past nine weeks since the rally began. The Nasdaq is up 34 percent and the S&P is up 36 percent.
The April jobs report cast a bit of a pall on the market today. The headline number showed 539,000 jobs were cutfrom nonfarm payrolls in April, far fewer than expected, but the prior month's payrolls were revised to show a sharper drop than initially reported and the unemployment rate jumped to 8.9 percent, the highest since September 1983.
Economists also noted that the headline number benefited from the addition of 72,000 government jobs, mostly for the 2010 census.
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.
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.
Bank stocks rallied between 5 and 20 percent amid relief that the results of the stress tests weren't worse. The results showed that 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, leaving their stocks up 14 percent and 3.9 percent, respectively.
Regional bank Fifth Third was the runaway winner in the sector, soaring 59 percent — in just one day — as the stress-test results showed the bank needs just $1.1 billion in fresh capital, much less than expected. Several analysts raised their price targets on the stock and bumped up their ratings to "outperform."
For the week, Fifth Third more than doubled, while Bank of America gained 63 percent, Citigroup advanced 37 percent and PNC Financial jumped 40 percent.
Oil ended the week at $58.63 a barrel, up 10 percent from a week ago. And, that's a new high for the year.
American depositary shares of Toyota fell 1.3 percent 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, causing the Nasdaq to bob in and out of negative territory a few times, with the sharpest losses in chip stocks. Nvidia , Microchip Technology and Marvell Technology were among the biggest percent decliners on the Nasdaq.
In fact, Nvidia was tech's biggest drag for the week, down nearly 21 percent.
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 .
MONDAY: Fed's Bernanke speaks; Earnings from Dish network
TUESDAY: Fed's Lockhart speaks; trade balance; federal budget; Earnings from Nissan, Applied Materials
WEDNESDAY: Weekly mortgage applications; retail sales; import prices; business inventories; weekly oil inventories; House hearing on AIG; Earnings from Macy's, Whole Foods
THURSDAY: PPI; weekly jobless claims; House hearing on the insurance industry; Earnings from Wal-Mart, Kohl's, Nordstrom
FRIDAY: CPI; industrial production; consumer sentiment; Earnings from JCPenney, Abercrombie
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