Stocks Gain, Led by Tech; AIG Sinks

Stocks came off the highs of the session but still rose after a mixed batch of economic news, but as oil prices stabilized at lower levels.

The Dow Jones Industrial Average rose more than 45 points, after ending slightly lower on Thursday.

Intel and Boeing led Dow components higher, while Wal-Mart and Home Depot fell.

The S&P 500 gained nearly three-quarter of a percent, while the Nasdaq rose more than 1 percent. The CBOE Volatility Index, widely considered the best gauge of fear in the market, sank more than 9 percent to nearly 19.

All key S&P 500 sectors advanced, led by financials, technology and materials.

Oil prices fell and have since traded largely flat after assurances from Saudi Arabia that it can pump more oil to cover for a fall in Libyan exports caused by the turmoil in the country. U.S. light sweet crude for April delivery was trading just above $97 a barrel, while Brent London crude was flat at about $111 a barrel.

The boost in stock prices Friday means the market isn't going to get the 5-to-10-percent correction it's seeking, Linda Duessel, equity strategist at Federated Investors told CNBC.com. Still, Duessel says unrest in the Middle East, and it affect on oil prices, is unlikley to go away soon, so it could still prove to be a catalyst.

"We don’t expect the news will go away over there," she said. "The only thing that could trump that in the near term, would be if the employment numbers are really good. We think they will be better, but not good enough yet."

The February nonfarm payroll report is due out a week from today.

Still, Federated Investors believes the correction, when it comes, won't last the year, and that the S&P 500 will end 2011 at 1,450.

In company news, stocks related to the personal computing industry traded higher on Friday. Intel , Micron and AMD all gained, while Philadelphia Semiconductor index rose nearly 2 percent.

Boeing led the Dow higher after the Pentagon announced Thursday after the bell that the US aircraft maker won a contract to build new refuelling planes for the US Air Force.

AIG sank as investors raised concernsabout the insurer's property insurance and aircraft leasing businesses. AIG had reported a profit of more than $11 billion in the fourth quarter, on asset sales, after the market closed on Thursday.

In other earnings news, Salesforce gained more than 6 percent after reporting stronger-than-expected revenue growth in its latest fiscal quarter. At least five brokerages raised their price targets for the maker of cloud computing applications.

First Solar , however, sank to the bottom of the S&P 500 index after the maker of solar panels forecast weaker sales this year and said it would cut prices to compensate for the end of solar subsidies in Europe. Still, at least six brokerages raised their price targets for the stock.

Among retail stocks, JC Penney also slumped after the department store retailer as investors worried about the company's ability to whether higher prices for fuel and clothing.

And shares of Gap weakened despite a boost in fiscal fourth-quarter earnings and news it would increase its dividend and stock buyback program as investors focused on the retailer's weak earnings outlook. Susquehanna cut Gap to neutral from positive.

Freddie Mac, the government controlled mortgage company, posted a loss of $1.7 billion in the fourth quarterof last year and asked for $500 million in government aid, more than $100 million it sought in the third quarter.

Meanwhile, a regulatory filing late Tuesday showed that Freddie Mac Executive Vice President Don Bisenius may face charges from the Securities and Exchange Committee for allegedly breaking securities laws before the housing collapse.

In economic news, the Reuters/University of Michigan consumer sentiment index rose to 77.5 , its best level since January 2008, from 74.2 in January this year.

Earlier the market brushed off a weaker-than-expected report on the nation's Gross Domestic Product. The economy grew at a 2.8 percent pacein the fourth quarter, down from an initial estimate of an annualized rate of 3.2 percent, the Commerce Department reported Friday. Economists had expected the revision to rise to 3.3 percent.

European stocks rebounded Friday morning but trading on the London Stock Exchange was stopped temporarily because of a technical glitch.Asian stocks inched higher as oil prices retreated.

On Tap Next Week:

MONDAY: Personal income and spending, Chicago purchasing managers index, pending home sales, Dallas Fed survey, farm prices; Boston Fed president Rosengren speaks.
TUESDAY: Auto sales, ISM manufacturing index, construction spending; Fannie/Freddie reform hearing before House financial services committee; and Bernanke's semi-annual report on monetary policy to Congress.
WEDNESDAY: Mortgage applications, Challenger job-cut report, ADP employment report, oil inventories, Federal Reserve's Beige Book; Atlanta Fed President Lockhart speaks; earnings before-the-bell from BJ's, Costco and Staples.
THURSDAY: Chain store sales, ECB announcement, Montster employment index, jobless claims, productivity and costs, ISM non-manufacturing index, natural gas inventories, money supply; Minneapolis Fed President Kocherlakota speaks, Atlanta Fed President Lockhart speaks; earnings before-the-bell from Heinz, Kroger; earnings-after-the-bell from Novell.
FRIDAY: Non-farm payrolls report, factory orders; Federal Budget Deadline.

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