Money flooded back into stocks this week as investors embraced a swift end to the presidential election, strong corporate earnings and good economic news.
After holding back over concern about the outcome of the election, investors began snapping up stocks Wednesday and kept up the pace the rest of the week. Volume on the New York Stock Exchange hit 1.72 billion shares on Friday, nearly 30 percent higher than the daily average for the past three months.
"The stock market has already exceeded its average post-election surge," said David R. Kotok, chairman of investment firm Cumberland Advisors. "The uncertainty that kept markets soft, the investor malaise, made stocks cheaper than they ought to have been."
The buying binge helped drive all the major market indices to strong weekly finishes.
The Dow Jones industrial average closed Friday at 10,387.54, up 72.78, or 0.7 percent for the day, and up 3.6 percent for the week. The broader Standard & Poor's 500-stock index finished up 4.5 points, or 0.4 percent, to close at 1166.17. The index gained 3.2 percent for the week and finished at its highest point since March 2002.
The technology-dominated Nasdaq composite index also turned in a strong week, rising 3.2 percent to 2038.94. The Nasdaq rose 15.31 points, or 0.8 percent, on Friday.
For the year, the Dow is down 0.6 percent, the S&P 500 is up 4.9 percent and the Nasdaq is up 1.8 percent.
Some traders said the Nasdaq's gains were limited this week because investors are waiting for an earnings report due on Tuesday from technology bellwether Cisco Systems, maker of Internet networking equipment.
Traders and strategists said a strong earnings report from Cisco could suggest that corporations are finally dipping into their vast cash holdings to upgrade computer hardware and software, something that could ignite a technology rally.
"We don't expect anything wild from [Cisco], but there could be a positive surprise with regard to business spending," said Philip S. Dow, director of equity strategy a RBC Dain Rauscher.
Overall, third-quarter earnings have been strong. As of Friday afternoon, nearly 90 percent of companies in the S&P 500 had reported earnings, according to Thomson Financial. The firms reported an average earnings gain of nearly 17 percent over the comparable period a year ago, with 64 percent beating analyst expectations, 20 percent falling below expectations and 16 percent directly meeting expectations.
Many firms have offered less optimistic outlooks for the fourth quarter, however, which has softened stock market gains, analysts said.
Fears of a faltering economy eased somewhat on Friday after the Labor Department released a report showing that employers added 337,00 non-farm payroll jobs in October, the biggest jump since March. The department also increased by 113,000 its estimate of the number of jobs created in August and September.
"I think the last two days, people were getting back in [the stock market] because we had a clear-cut winner" in the presidential election, said Todd Leone, head of listed trading for SG Cowen. "Today, the great employment numbers hit, and, boom, we were off again."
Buying took place across the board on Friday, with 23 out of 30 stocks in the Dow gaining ground and 322 out of 500 stocks in the S&P 500 rising. The Labor Department numbers sparked a sell-off in the bond market, as investors bet the Federal Reserve would move to raise interest rates at its meetings in both November and December.
Among the biggest stock market winners on Friday was Sears Roebuck, which gained $8.70, or 23 percent, to close $45.88. Traders said the surge was driven by a large purchase of Sears shares by Vornado Realty Trust. Vornado and others think Sears's large real estate holdings are not fully reflected in the retailer's stock price.
Meanwhile, the stock market rally appears to be following the historical pattern in which investors prefer incumbent presidential victories -- and the stability they bring -- to wins by the challenger
"Generally speaking, when you have a challenger win, he spends his first year discussing how things are even worse than he told you they were during the campaign, and he has to do a whole lot to fix it," said Tom McClellan, publisher of the McClellan Market Report. "When an incumbent wins, he tends not to do so much bad-mouthing and people don't get bummed out as much."
Stocks tend to do better in the year after an incumbent wins, McClellan said. The trend reverses itself in the final year of an incumbent's second term, however, when the market starts to prepare for the inevitability of change in the Oval Office.
* The New York Stock Exchange composite index rose 21.03, to 6906.23; the American Stock Exchange index fell 2.30, to 1327.18; and the Russell 2000 index of smaller-company stocks rose 2.16, to 604.29.
* Declining issues narrowly outnumbered advancing ones on the NYSE, where trading volume fell to 1.72 billion shares, from 1.78 billion on Thursday. On the Nasdaq Stock Market, advancers outnumbered decliners by 3 to 2 and volume totaled 1.89 billion, up from 1.8 billion.
* The price of the Treasury's 10-year note fell $8.13 per $1,000 invested, and its yield rose to 4.18 percent, from 4.08 percent on Thursday.
* The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 105.65 yen, down from 106.08 late Thursday, and a euro bought $1.2962, up from $1.2867.
* Light, sweet crude oil for December delivery settled at $49.61, up 79 cents, on the New York Mercantile Exchange.
* Gold for current delivery rose to $433.60 a troy ounce, from $430.10 on Thursday, on the New York Mercantile Exchange's Commodity Exchange.