Week Ends on High Note

U.S. stocks overcome a shaky start and close with gains.
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Updated from 4:12 p.m. EST

Wall Street overcame a shaky start and finished higher Friday as traders lifted stocks following the latest data on employment and consumer attitudes.

The

Dow Jones Industrial Average

finished up 29.08 points, or 0.24%, to 12,307.49, having been down as many as 35 points earlier. The

S&P 500

rose 2.55 points, or 0.18%, to 1409.84, and the

Nasdaq Composite

gained 9.67 points, or 0.4%, to 2437.36.

The higher close provided a positive finish to what's been an up-and-down week. The Dow added 113 points, or 0.9%, and the S&P 500 gained 13 points, or 1%. The Nasdaq gained 24 points, or 1%, over the five sessions.

About 2.48 billion shares changed hands on the

New York Stock Exchange

, and volume on the Nasdaq was roughly 1.84 billion shares. Winners and losers were matched.

Even before the open, investors focused their attention on the Labor Department, which said the economy added 132,000 jobs in November, above expectations for a gain of around 100,000 or so jobs.

Revisions to the prior reports showed stronger growth than first indicated. Payroll numbers for September were revised higher by 55,000 jobs, while October was lower than first reported by 13,000. That means for those two months, an additional 42,000 jobs were formed.

The unemployment rate rose to 4.5% from 4.4%, and average hourly earnings, a key inflation metric, ticked up a less-than-expected 0.2%.

"Overall, employment is growing more slowly than in the third quarter, when GDP growth was a sluggish 2.1%," said Peter Morici, professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission.

"At the November pace of jobs creation, unemployment will likely rise in the months ahead, and the probability that the economy will slip into recession has grown significantly," he continued.

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Federal Reserve

officials will use the information to help them determine the future direction of interest rates. The central bank meets next week, but no change in the target fed funds rate is anticipated. However, many market participants are hoping for a reduction from the current 5.25% rate at some point next year.

"This continues to keep the Fed on the sidelines," said Barry Hyman, equity market strategist with EKN Financial. "There isn't any strong ammunition to support a rate cut or softening inflationary prospects. However, this is good for the market. This keeps pointing to a soft landing."

Fed funds futures are now pricing in 8% odds of a rate cut in January, down from 14% before the report. The chance of a rate decrease in March is now seen at 32%, down from 48% previously.

The strength of the jobs report overshadowed the University of Michigan's preliminary consumer sentiment index for December, which fell to 90.2 from 92.1 the previous month. Economists had expected the index to tick up to 92.4.

Consumer spending is the linchpin of the U.S. economy, and any suggestion that opinions are turning negative, especially in front of the important holiday shopping season, can contribute to worries about a slowdown.

Treasuries dropped after the data. The 10-year fell by 19/32, yielding 4.56%. The 30-year bond lost 29/32 to lift the yield to 4.66%. The dollar was mixed against other major currencies.

On the corporate side, the auto sector was making headlines. According to one report, Wanxiang, China's biggest auto-parts maker, is holding discussions to buy some of the assets of

Ford's

(F) - Get Report

components unit. Ford rose 7 cents, or 1%, to close at $7.23.

Separately, another report indicated that

General Motors

(GM) - Get Report

is planning to start selling Opel Astras in North America under the Saturn name starting late next year. GM tacked on 53 cents, or 1.8%, to $29.58.

Traders kept a focus on the semiconductor group, as following the previous close, both

Xilinx

(XLNX) - Get Report

and

National Semiconductor

(NSM)

issued soft forecasts.

Those outlooks came on the heels of a Gartner report that said worldwide chip revenue is set to rise 11% in 2006. Xilinx dropped 6.1% to $24.83, while National Semiconductor managed to gain 0.2% to $23.97.

Moving to commodities, oil prices spent most of the session holding gains before ending lower. Crude futures moved above the $63 level before falling 46 cents to close at $62.03 a barrel.

Precious metals also reversed early strength and closed with losses. Gold was down $6 to $631 an ounce, and silver lost 14 cents to $13.89 an ounce.