Stocks Lifted by Economic 'Healing'

(Updated with closing prices.)

NEW YORK (TheStreet --Stocks recorded an up day in a down week Friday with a bit of help from short-covering after the goverment reported slowing job losses.

The Dow Jones Industrial Average was up 96.66 points, or 1%, at 9441.27, while the S&P 500 edged up 13.16 points, or 1.3%, to 1016.40. The Nasdaq Composite advanced 35.58 points, or 1.8%, to 2018.78.

But that wasn't enough to bring stocks positive for the week. Hurt by a sharp selloff on Tuesday, the Dow lost 1%, the S&P 500 gave up 1.2%, and the Nasdaq shed 0.5% in the five-day session.

All but two Dow components were in positive territory Friday, with General Electric(GE Quote) rising 3.1% to lead the index, and Microsoft(MSFT Quote) and Caterpillar(CAT Quote) advancing more than 2%.

"The key there is that it is a long weekend, and we entered the week with the breakdown in the financials, so you had a lot of people jump on the shorts on Tuesday, and a lot of people were looking for a bad [unemployment] number," says Marc Pado, U.S. market strategist Cantor Fitzgerald. "So a lot of this is short covering ahead of the weekend."

The goverment's employment report for August, the most highly anticipated data of the week, had positives and negatives. But none of it shocked anyone, says Pado.

The unemployment rate rose more than expected, to 9.7%. But the level of job cuts came in at 216,000, which was less than July's upwardly revised total of 276,000, and is the lowest in a year. Analysts expected the unemployment rate to rise to 9.5% from July's 9.4%, and job reductions to total 225,000.

"I think that generally this report suggests that more healing is taking place in the economy," says Jeffrey Kleintop, chief market strategist, LPL Financial, adding that we may see the nonfarm payroll number turn positive by the end of this year, or early next year.