Stocks Climb Higher After Jobs Report

Stocks pushed higher after a wobbly start Friday as investors digested a mixed jobs report: The unemployment rate hit a 26-year high but layoffs seemed to be tapering off.

The unemployment rate jumped to 9.7 percentin August, two-tenths of a percent higher than expected. Employers cut 216,000 from nonfarm payrolls, less than expected.

Futures had initially dropped after the report as investors were rattled by the jump in the unemployment rate but then recovered as the market focused on the fact that the pace of layoffs is slowing.

"I would not be too discouraged about the unemployment rate. The decline last month was too good to be true, really," Nigel Gault, chief U.S. economist at IHS Global Insight, told Reuters. "It's too early for the unemployment rate to be coming down, of course we're still losing jobs. 'What I would take encouragement from is the fact is the trend in the rate of decline in jobs is still improving."

Investors will also be watching the G20 finance ministers meeting in London, which kicks off today.

Wall Street's major averages did manage to register their first gains of the new month on Thursday. Though it's obviously too early to determine whether September 2009 will buck the trend of this particular month — on average — being the worst one of the year for stock investors.

The Crisis: 1 Year Later - A CNBC Special Report - See Complete Coverage
The Crisis: 1 Year Later - A CNBC Special Report - See Complete Coverage

Gold pulled back a bit after the best two-day rally since March which pushed the December contract as high as $999.50 Thursday. Gold hasn't closed above $1,000 since February 20.

Oil futures fell below $68 a barrel, though Dow energy components ExxonMobil and Chevron ticked higher.

In earnings, H&R Block, the nation's biggest tax preparer, reported a wider-than-expected loss but backed its full-year outlook.

Elsewhere, shares of Fannie Mae and Freddie Mac both jumped as the two agencies continue to be popular trading vehicles even though they are essentially wards of the government.

The two government-sponsored entities have been among the most heavily traded issues on the New York Stock Exchange this week and have now regained the minimum list price required to trade on the Big Board, which sent the stocks up even more.

Other heavily-traded financials continued to rally, including Bank of America , Citigroup and Wells Fargo all posted solid gains Thursday.

CIT Group also rose but AIG skidded.

Tech stocks advanced after Intel's CEO said aging personal computers and Windows 7 will prompt companies to start spending on PCs again next year. The remarks underscored the wider belief that company IT spending will pick up next year.

Abercrombie & Fitch shares skidded after Citigroup downgraded the stock to "sell" from "hold," saying the teen chain will continue to see same-store sales deteriorate as it hasn't managed the recession well.

- Peter Schacknow contributed to this article.