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Stocks Higher Ahead of Jobs Data

A downgrade of Microsoft has limited impact.

Stocks firmed early Friday as traders looked past a downgrade of

Microsoft

(MSFT) - Get Microsoft Corporation Report

and went long ahead of the monthly employment report.

Index futures recently showed the

S&P 500

trading 2 points above fair value, while the Nasdaq 100 was set for a 2.5-point gain. The 10-year Treasury bond was down 2/32 in price to yield 4.36%, 4 basis points above the two-year yield, while the dollar rose against the yen.

Investors will take their cue Friday from the Labor Department's December jobs release, which is expected to a show a 200,000-person increase to U.S. payrolls and an unemployment rate of 5%, unchanged from November. A better-than-expected payroll number could hurt stocks because of its implications for interest-rate policy.

Heading into Friday, the

Dow Jones Industrial Average

is up 164 points, or 1.5%, this week, while the S&P 500 has risen 25 points, or 2%, and the

Nasdaq Composite

is up 72 points, or 3.3%.

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Oil was another factor Friday as crude prices continued to defy gravity amid fresh speculative inflows and evidence of a strong economy. February crude was recently up 66 cents to $63.45 a barrel, its highest level since early October.

Overseas markets were flat to higher, with London's FTSE 100 recently up 0.2% to 5701 and Germany's Xetra DAX unchanged at 5516. In Asia, Japan's Nikkei was flat overnight at 16,428, while Hong Kong's Hang Seng added 0.5% to 15,344.

Among stocks, Microsoft was cut to neutral from buy at CSFB, which cited recent price appreciation. The stock closed just under $27 Thursday after spending most of October below $25.

IBM

(IBM) - Get International Business Machines Corporation Report

will stop contributing to employee pensions starting in 2008, instead putting funds in 401(k) plans where employees must direct their own investing. The move is part of a trend away from costly "defined benefit" plans at many companies.

Shares of

Take-Two

(TTWO) - Get Take-Two Interactive Software, Inc. Report

fell 8% late Thursday after the video-game company reported a 70% plunge in fourth-quarter earnings and cut guidance for the current quarter and year. Fourth-quarter earnings also missed estimates.

Accenture's

(ACN) - Get Accenture Plc Class A Report

first-quarter earnings topped estimates. The consultancy earned $214.9 million, or 36 cents a share, compared with $196.3 million, or 32 cents a share, a year earlier.Net revenue grew 12%.