NEW YORK ( TheStreet) -- Stocks overcame early losses to close higher Friday, as rallying technology and industrial stocks outweighed a much larger-than-expected number of job losses in December. The Dow Jones Industrial Average added 11 points, or 0.1%, at 10,618. The S&P 500 climbed 3 points, or 0.3%, at 1145, and the tech-heavy Nasdaq gained 17 points, or 0.7%, at 2317. The major market averages finished the first trading week of the new year on an up note, with the Dow going higher by 1.8%, the S&P rising 2.7% and the Nasdaq moving up by 2.1%. >>Five Cheap Small-Cap Stocks to Buy Tech bellwethers Microsoft ( MSFT), Intel ( INTC), Hewlett-Packard ( HPQ) and Cisco ( CSCO) charted an upward course for the Dow, rising 0.7%, 1.1%, 0.8% and 0.5%, respectively. After outpacing other sectors on Thursday, financial stocks retreated Friday after
a Citi analyst cut his views on Goldman Sachs ( GS), JPMorgan Chase ( JPM), Morgan Stanley ( MS) and Bank of America ( BAC). Shares traded lower by 1.9%, 0.3%, 2% and 0.9%, respectively. Alcoa ( AA) led percentage advancers on the Dow, rising 2.5% Friday. As the first of the blue-chip average components to report quarterly results, the aluminum-producer will kick off earnings season Monday, with average estimates from Reuters calling for earnings of 6 cents a share on $4.8 billion in revenue. Coca-Cola ( KO) was the Dow's biggest laggard, with shares down 1.9% after JPMorgan downgraded the company to neutral from overweight. Stocks spent much of their day just below the flatline after the Labor Department said the unemployment rate held at 10% in December and nonfarm payrolls dropped 85,000, for a total decrease of 4.2 million jobs in 2009. The government also upwardly revised November's figure to an increase of 4,000 payrolls from an initially reported decline of 11,000.
"The December jobs report does nothing to resolve uncertainty about the pace of economic recovery and will provide both bulls and bears with justification of their short-term positions," said PNC chief economist Stuart Hoffman. Economists' projections ran a gamut spanning job loss to job growth, reaching a consensus expectation of
no change in the job market last month. "Weaker employment across construction and leisure and hospitality industries can be attributed to weather," said Burt White, chief investment officer for LPL Financial, identifying some silver linings in the report. "Manufacturing employment was better than people thought with a decrease of 27,000 while the consensus estimate was for a decline of 35,000. At the end of the day, manufacturing is usually a good leading indicator in terms of demand, inventory restocking and capex spending. It's getting a little better and a little bit faster than anticipated." One potentially troubling area, according to White, was temporary employment, which added 47,000 jobs in December, well ahead of the health care industry, which also saw jobs growth with payrolls rising by 22,000. "The bulk of jobs creation was in part-time workers. That's a positive sign early on in the recovery but we've seen several months of this in a row, which could start to raise concerns." Considering that some market observers had expected to see job creation in December, markets appeared to take the larger-than-expected decline in stride. The report supported improving trends across the labor market as jobs losses moderated significantly throughout the year. Job losses averaged 691,000 per month in the first quarter of 2009, compared with 69,000 per month in the fourth quarter.
"I would have to broadly describe the report as being pretty disappointing," said Keith Hembre, chief economist and chief investment strategist at First American Funds of Minneapolis, who was struck by declines in labor participation rates. "Basically if the participation rate were the same as it was back in August, then the unemployment rate would be up significantly." The labor participation rate was 64.6% in December, and there were 929,000 discouraged workers, compared with 642,000 a year ago. Still, Hembre expects job numbers to venture into positive territory in the coming months. "We're moving toward stability in the labor market. We're not there yet. Unemployment is extremely high and it will be extremely slow to fall but the implication for the Fed is that we're a ways off from them raising interest rates." Prices on two-year Treasury notes rose, with the yield down to 0.972%. Wall Street has been preoccupied with the report throughout the week, as employment data has filtered in. On Wednesday, the ADP jobs report showed that private employers cut 84,000 jobs in December, and on Thursday, initial jobless claims came in at 434,000, adding 1,000 from the previous week but growing at a milder rate than Wall Street expected. With the labor market struggling, curbed access to credit and declining borrowing led to a record $17.5 billion tumble in consumer credit for November, according to Federal Reserve statistics released in the afternoon. Consensus forecasts estimated a $5 billion drop.