Wall Street shook off early losses Friday and extended the previous session's big rally, helping to push the Dow Jones industrial average to its first winning week in almost two months.
Analysts were encouraged by the upturn because they'd expected a sell-off following the market's rally Thursday, when the Dow gained 237 points and the Nasdaq composite index climbed 103. With little positive news about earnings and the economy, investors have limited many buying sprees to one day. Friday was the third straight day of gains for the Dow and Nasdaq.
"This is just a darn good follow-through to big gains," said Scott Bleier, chief investment strategist at Prime Charter.
The Dow Jones industrial average rose 60.07 points, or 0.6%, to 10,539.06, after falling as much as 46 points in early trading. For the week, the Dow gained 2.8%, its first weekly gain since May 18. The blue-chip average is off 2.3% year to date.
The broader market also finished higher Friday and posted weekly gains. Nasdaq rose 9.05 points, or 0.4%, to 2,084.79 and ended the week up 4%. The tech-laden index is down 15.6% for the year. The Standard & Poor's 500 index advanced 7.54 points, or 0.6%, to 1,215.68. The S&P;'s weekly gain was 2.1%; the benchmark index has lost 7.9% this year.
Although Friday's session lacked noteworthy earnings news, the market had three positive economic reports in its favor. The Labor Department said its producer price index, which measures inflation before it reaches the consumer, fell 0.4% in June, the first decline since August.
A second report showed retail sales rose 0.2% in June, bumped up by strong sales of new cars. The reading was slightly lower than analysts were expecting.
Meanwhile, the University of Michigan's mid-month report on consumer sentiment for July reportedly showed an increase to 93.7 from 92.6 in June.
As the outlook for the economy improves, analysts expect the market to gradually head higher.
"The market's going to rally when the worst looks like it's over and people get confident that they can buy now and not lose a lot of money," said John Forelli, portfolio manager for the John Hancock Core Value fund.
Friday's positive economic data helped boost consumer cyclical stocks, which tend to move up and down with the economy. Caterpillar climbed 58 cents to $52.48, and Ford rose 34 cents to $25.60.
The retailing sector was mixed, with sales and earnings reports ruling the direction of certain stocks.
Toys R Us fell 35 cents to $24.80 after the retailer warned its second-quarter loss will be larger than expected. Wal-Mart rose $1.05 to $52.90, boosted by a report Thursday that sales from stores open at least a year rose 6.9%, well above expectations.
The market had to work hard for its gains. Volume was lighter than normal, a sign investors were trading cautiously. Winners outpaced losers 3 to 2 on the New York Stock Exchange and by about 5 to 4 on Nasdaq.
Overall, the market's gains were spread across a variety of sectors. Networking bellwether Cisco Systems rose 88 cents to $18.74, and drug maker Pfizer advanced 83 cents to $38.43.
With more than 720 companies already issuing second-quarter profit warnings, analysts say investors now are more concerned about what businesses have to say about the future.
Chip maker Advanced Micro Devices proved that theory, falling $1.62 to $21.08. Late Thursday, AMD said it barely beat Wall Street's dramatically lowered second-quarter earnings and revealed its grim outlook for the current quarter.
Bonds were mixed. The yield on the two-year Treasury note rose to 4.08% from Thursday's close of 4.03%, and the yield on the benchmark 10-year note fell to 5.22% from 5.24% on Thursday.
Market Roundup, C4-5