Coming Week: Not There Yet

Wall Street's latest burst of exuberance had investors hoping on Friday morning that the fourth straight month of declines in the job market was a positive sign for the U.S. economy.

It wasn't.

The economy shed 20,000 jobs in April, according to the Labor Department. Economists on Wall Street had predicted a decline of 80,000, so the report prompted a momentary rally in the stock market after the opening bell that quickly dissipated as reality set in.

"April payrolls were down just 20,000, but this masks the fact that most components declined substantially in the month," said Joseph LaVorgna, chief U.S. economist with Deutsche Bank.

Sectors like manufacturing, construction, transportation and retail all posted sizeable declines in jobs. The gainers included the services sector, health care and education, government and, surprisingly, financial services.

"How in the world is it possible that the financial sector added jobs last month?" asks Paul Mendelsohn, chief investment strategist with Windham Financial Services. "This report was not a positive in my mind. Previous months were revised lower, and there's no sign that the labor market is improving."

As those sentiments spread through the markets, Friday morning's rally gave way to mixed trading as most investors waited for news on the negotiations surrounding Microsoft's MSFT bid to acquire Yahoo! YHOO, an effort aimed at helping the tech giant compete with Google GOOG in the fast-growing online ad market.

Next week, investors will be looking for new reasons to extend Wall Street's stock rally. Despite Friday's pullback, the Dow Jones Industrial Average ended the week with a total gain of 1.3%. The Nasdaq Composite added 2.2% for the week and the S&P 500 gained 1.1%.