Stocks rose today as investors anticipated a Federal Reserve interest rate cut next week, dimming the allure of bonds. Computer-related shares such as Intel and Cisco Systems led the advance.
Benchmark indexes finished a fourth week of gains as reports showing rising unemployment and slowing manufacturing increased speculation that the central bank will lower borrowing costs to boost economic growth.
"The drop in interest rates is starting to make stocks look really good," said Edgar Peters, who oversees $12 billion as chief investment officer at PanAgora Asset Management. He said he is planning to shift assets into equities from bonds, which are outperforming stocks for a third year.
The Standard & Poor's 500-stock index rose 15.20, or 1.7 percent, to 900.96, its highest close since Sept. 11. Computer-related shares contributed a fifth of the gain, and all 10 of the index's industry groups rose, as investors bet that lower rates will spur capital spending.
The Dow Jones industrial average climbed 120.61, or 1.4 percent, to 8517.64. The Nasdaq composite index advanced 30.95, or 2.3 percent, to 1360.70, its highest finish since Aug. 26.
For the week, the S&P was up 0.4 percent, the Dow gained 0.9 percent and the Nasdaq rose 2.2 percent. The indexes haven't had a losing week since Oct. 4.
Speculation that the central bank will lower rates next week picked up after the Labor Department said the unemployment rate rose to 5.7 percent in October, from 5.6 percent the prior month, and the economy lost 5,000 jobs.
Further evidence the recovery is weakening came when the Institute for Supply Management reported its factory index was 48.5 last month. A reading below 50 indicates manufacturing contracted.
Among technology stocks, Intel jumped $1.00, to $18.30; Cisco surged 43 cents, to $11.61; and IBM advanced $1.46, to $80.40.
SBC Communications added $1.59, to $27.25. Lehman Brothers analyst Blake Bath kept his "overweight" recommendation on the local-phone company, while downgrading shares of Verizon and BellSouth to "equal weight."
Andrx jumped $2.92, to $18.37. The drugmaker will work with Schwarz Pharma and Genpharm to sell generic versions of AstraZeneca's Prilosec ulcer drug.
ImClone Systems rose 64 cents, to $7.80. The biotechnology company and drugmaker Bristol-Myers Squibb plan to begin the first large-scale studies of the cancer drug Erbitux, which failed in December to gain acceptance from U.S. regulators and is at the center of insider-trading probes.
* The New York Stock Exchange composite index rose 7.51, to 480.41; the American Stock Exchange index rose 9.99, to 828.99; and the Russell index of 2,000 small stocks rose 9.95, to 383.45.
* Advancing issues outnumbered declining ones by 5 to 2 on the NYSE, where trading volume fell to 1.46 billion shares, from 1.64 billion on Thursday. On the Nasdaq, advancers outnumbered decliners by 2 to 1 and volume totaled 1.79 billion shares, up from 1.64 billion.
* The price of the Treasury's benchmark 10-year note fell $9.06 per $1,000 invested, and its yield rose to 4.01 percent, from 3.90 percent late Thursday.
* The dollar fell against the Japanese yen and rose against the euro. In late New York trading, a dollar bought 122.20 yen, down from 122.48 yen late Thursday, and a euro bought 98.66 cents, down from 98.99 cents.
* Light, sweet crude oil for December delivery settled at $27.13 a barrel, down 9 cents, on the New York Mercantile Exchange.
* Gold for current delivery rose on the Commodity Exchange division of the New York Mercantile Exchange to $318.80 a troy ounce from $318.00 on Thursday.