Stocks Hold Solid Gains

Another strong gain in nonfarm payrolls and Intel's positive forecast boost sentiment.
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Updated from 4:04 p.m. EDT

Stocks closed Friday with solid gains, despite a slight late-session selloff leading into the weekend, as investors cheered a strong employment report and positive guidance from

Intel

(INTC) - Get Report

.

The

Dow Jones Industrial Average

gained 47.26 points, or 0.46%, to 10,243.17; the

S&P 500

added 5.90 points, or 0.53%, to 1122.54; and the

Nasdaq Composite

jumped 18.36 points, or 0.94%, to 1978.62.

"I think the positive reaction from the market here shows that we have effectively discounted the fact that the

Fed

is going to raise interest rates," said Arthur Hogan, chief market analyst at Jefferies. "So, I think we've sort of gotten over that. It's priced into the marketplace, and we're at a point where good news can be good for a while. That's a much healthier place for the market to be in."

While the broad gains impressed traders, volume was a disappointment. Just over 1.1 billion shares traded on the

New York Stock Exchange

, while almost 1.4 billion changed hands on the Nasdaq. Advancers outnumbered decliners by about 2 to 1 on both exchanges.

Despite Friday's progress, stocks lost some steam during the week, after staging a strong rally in the week before. While the Dow and the S&P are now on two-week winning streaks, up 0.5% and 0.2% respectively, since the previous Friday, the Nasdaq lost 0.4% on the week.

The session started strong after the Labor Department said new jobs sprang up throughout the economy for the third month in a row, after an apparent jobless recovery had confounded pundits and politicians alike. Nonfarm payrolls rose 248,000 in May. Economists had expected an increase of 225,000 jobs. Job growth in April and March was also revised higher. The unemployment rate remained at 5.6%. Also in May, hourly earnings increased 0.3%, more than expected, and the average work week was in line with estimates at 33.8 hours.

"These numbers are not too hot and not too cold," said Barry Ritholtz, chief market strategist at Maxim Group, who thinks the latest employment data confirms Wall Street's expectations for a measured tightening of interest rates beginning in June. "It's quarter-point increases as far as the eye can see. You don't want to see numbers so hot that it forces the Fed to do anything rash, but at the same time, you don't want anything so cool that it points to an anemic economic recovery.

"All told, you have to be happy with this report, and you have to be happy with the direction of oil prices," Ritholtz added. "The real question now is once corporations no longer have the ability to sell goods and services through ultra-cheap financing, will the real demand start showing up that will allow the recovery to turn into a real, multiyear economic expansion? That's a legitimate question."

In other markets, the Treasury's 10-year note was down 15/32, yielding 4.77%, gold prices climbed and oil was down again for the third straight session. The dollar was mixed, gaining against the Japanese yen, but falling vs. the euro.

Crude oil prices continued their slide, which began Thursday after OPEC ministers meeting in Beirut agreed to increase production quotas by 2 million barrels a day next month. They also agreed to raise the target by an additional 500,000 barrels a day in August if necessary. Nymex crude was recently down 79 cents, or 2%, to $38.49.

Interest rate worries, triggered by speculation about the strength of the forthcoming jobs report, prompted a broad market decline Thursday.

However, Intel's midquarter update, in which it adjusted revenue guidance, boosted sentiment after the markets had closed Thursday. The chip giant narrowed the range of its second-quarter revenue forecast to the upper end, citing better-than-expected performance in its communications business. Shares closed up 73 cents, or 2.7%, $28.14.

Circuit City

(CC) - Get Report

said same-store sales rose 6.4% in its first quarter, and total sales were up 7% to $2.07 billion, compared to $1.93 billion logged in the same quarter last year. It cited strong sales of digital, plasma and LCD televisions, DVD players and digital imaging products, as well as price cuts that helped it compete with its chief rival,

Best Buy

(BBY) - Get Report

. Its shares closed up 23 cents, or 1.9%, to $12.48.

Sanjay Kumar, who had stepped down as chairman and chief executive at

Computer Associates

(CA) - Get Report

in April, but remained as chief software architect, has decided to leave the company amid an ongoing criminal probe into its accounting. Chairman Lewis Ranieri said the board is committed to reaching a settlement of the government's investigation as quickly as possible, and Kumar's decision to leave CA was made in that spirit. The company's shares added 86 cents, or 3.3%, to $27.16.

Also,

Maytag

(MYG)

shares dropped $2.02, or 7.7%, to $24.27 after the appliance maker announced plans to eliminate 20% of its workforce and said that second-quarter earnings would come in below estimates.

Overseas markets closed higher. In London, the FTSE 100 gained 0.4% to 4454 and Germany's Xetra DAX rose 1.1% to 3962. In Asia, Japan's Nikkei closed about 0.9 higher at 11,128 and Hong Kong's Hang Seng gained 0.4% to 12,022.

No major economic releases or earnings announcements are expected for Monday.