Dow leaps to record after jobs report, up 5th week

NEW YORK (MarketWatch) — U.S. stocks rose on Friday after a stronger-than-expected October jobs report, leading to a record close for the Dow industrials and a fifth straight weekly gain for both the Dow and the S&P 500.

The Dow Jones Industrial Average (DJIA)  climbed 167.80 points, or 1.1%, to end at 15761.78, topping Wednesday's record close. The blue-chip index advanced 0.9% for the week.

The S&P 500 (SPX)  rose 23.46 points, or 1.3%, to close at 1,770.61, slightly below its Oct. 29 record close. For the week, the benchmark index was up 0.5%.

The Nasdaq Composite (COMP)  gained 61.90 points, or 1.6%, to close at 3,919.23, helped by a nearly 5% jump for Priceline.com Inc. (PCLN)  after its earnings report. The tech-heavy index was down 0.1% for the week, falling for the second week in a row.

Meanwhile, the Russell 2000 index (RUT) , a gauge of small-cap stocks, was up 20.88 points, or 1.9%, at 1,099.97. Some eyebrows were raised Wednesday when the Russell diverged, ending lower as the S&P 500 gained ground. The Russell, however, outpaced the S&P 500 on Friday, though it still slightly underperformed for the week, gaining 0.4%.

Getty Images A speech by Fed chief Ben Bernanke could draw the market's attention on Friday.

The Labor Department said the U.S. economy added 204,000 jobs in October, well above the 100,000 jobs expected by economists polled by MarketWatch. The unemployment rate ticked up to 7.3% from 7.2%. In other data, the University of Michigan/Thomson Reuters consumer-sentiment index fell this month to 72, the lowest level in nearly two years and below expectations for 75.

"You've got two competing data points, and a schizophrenic posture in the market," said Drew Wilson, an analyst at Fenimore Asset Management.

The stronger-than-expected jobs report at first hammered stock futures, as traders bet the report could bring forward the timing for when the Federal Reserve will taper its bond-buying program that's boosted equities. But then futures turned roughly flat and stocks advanced, closing near session highs.

Click to Play WSJ analysis: October jobs report

Job creation accelerated in October as payrolls advanced by 204,000, exceeding economists' expectations. WSJ's economics team takes a look at the numbers and how they could impact Fed policy, plus, an update on the markets. Photo: Getty Images.

Wilson described the initial selloff on the jobs report as a "good news is bad news market," meaning some investors selling on economic strength that could reduce the Fed's stimulus measures. That selloff was followed by a "bad news is good news" reaction to the soft sentiment report, leading to gains for the main stock indexes, he said.

But Wilson also said it's possible that more market participants are just upbeat after the jobs report, believing that good news is simply good news. "Even for those who fear the taper, there has to be some faction who believe that the healing of the patient in the long run will be a good thing," the analyst told MarketWatch. Wilson said he's "a believer that good news is good news."

On the other hand, strategist Nick Colas said stock futures recovered because market participants questioned some details in the jobs report. While the headline number beat forecasts, many jobs added were part time, and participants wondered about the eventual revisions, said Colas, chief market strategist at ConvergEx Group. Read more: How believable is the October jobs report?

"I think there's a lot of skepticism of the quality of this number," Colas told MarketWatch.

Colas also said "it's going to be a while" before market participants generally believe that good news is good news. The maxim that "Wall Street isn't the economy" has never been more true, Colas added, as Wall Street has a lot of Fed stimulus baked into its prices. Read more: 'Dectaper back on table

ECONOMY AND POLITICS | @MKTWEconomics

October job gains trounce expectations
These charts show nonfarm employment picking up in October,while the headline unemployment rate ticked up, likely showing the impact of the government's shutdown.
• U.S. economy adds 204,000 jobs in October
• 'Dectaper' back on table: payrolls reactions
• Not everyone sees 'Dectaper'
• Temporary layoffs spike 448,000
• Job seekers pad resumes with credentials
/conga/story/misc/dc.html 286436

Underscoring the uncertainty, Atlanta Federal Reserve Bank President Dennis Lockhart called the environment for monetary policy-making "murkier than I would like," with less reliable economic data making it difficult for the central bank to read the economy's pulse.

Twitter (TWTR) shares dropped 7.2% on Friday, after surging more than 70% in their debut in the previous session.

European stocks fell, with the French CAC 40 index (FR:PX1)  under particular pressure after Standard & Poor's cut the country's credit rating by one notch to 'AA,' citing worries about growth prospects. The dollar (DXY)  rose, while gold futures dropped.