U.S. Stocks Open Higher On Jobs Data, Fed Action

NEW YORK (MarketWatch) -- U.S. stocks jumped sharply higher at the start of trade on Friday, adding to the prior day's rally, after the government reported far fewer than expected job losses in April and the Federal Reserve widened the funding it offers to banks.

"Equities surged sharply higher on combined news of a firmer than expected employment report -- relative to downbeat expectations -- and a more aggressive targeting of short-term liquidity needs by the Fed," said analysts at Action Economics.

After climbing 125 points after the opening bell, the Dow Jones Industrial Average was more recently up 67.26 points to 13,077.26. Top gainers on the Dow industrials included Citigroup , up 2.5%, and Bank of America , which also rose more than 2%.

The S&P 500 gained 8.07 points to 1,417.41, while the Nasdaq Composite climbed 7.05 points to 2,487.76.

Job losses narrowed in April, with nonfarm payrolls dropping by 20,000, far fewer than the 75,000 decline anticipated by analysts.

Just ahead of the Labor Department payrolls report, the Fed, along with other central banks, said it was increasing by 50% the amounts auctioned to eligible depository institutions, and is for the first time accepting bonds backed by auto loans and credit cards. .

The dollar rallied and bonds sold off on the news. Elsewhere, oil futures rose 86 cents to $113.38 a barrel.

Also of note, Microsoft Corp. and Yahoo Inc. were again in the headlines as the Wall Street Journal that Microsoft is leaning toward a hostile bid for the Internet search group, which has rejected the unsolicited takeover offer made in January. Yahoo shares rose over 2% to $27.38.

Shares of Sun Microsystems dropped 18.7% after the server and software company said late Thursday it swung to a third quarter loss of $34 million and only broke-even before one-off costs. The result was well below the 18 cents-a-share profit expected by analysts.

Telecom equipment maker Nortel Networks jumped 3.8% in early trade. The company said its first-quarter loss widened, while sales rose 11%.

Media giant Viacom
reported a 33% profit rise, topping analyst estimates.

By Kate Gibson