"The market is pretty much ignoring [the jobs report], while the merger activity and generally a very good earnings season is helping to push prices higher," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank.
Still, investors consolidated some of the market's strong gains after the the Dow Jones Industrial Average hit another record high of 13,284.
The Dow was recently down 10 points at 13,230.
Among blue-chips, Microsoft Corp. fell 1.9% after reports that it is trying to buy internet search engine Yahoo Inc. .
Out of the Dow, Reuters stock shot up 25% after news it was approached by an unidentified party.
Earlier in the week shares of Dow Jones & Co. , publisher of this report, skyrocketed on news it received a $5 billion takeover offer from News Corp. .
"The takeover mania continues with Yahoo and Reuters the names du jour," said Eliot Spar, analyst at Ryan Beck & Co. "The strong stocks continue to move higher as underperforming money managers pile on and the weak stocks catch bids as they become takeover bait."
The S&P 500 gained 0.7 points to 1,503, while the Nasdaq Composite fell 1.7 points at 2,563.
Trading volumes showed 760 million shares exchanging hands on the New York Stock Exchange and 1.1 billion trading on the Nasdaq stock market. Advancing issues outpaced decliners by 8 to 7 on the NYSE, while decliners outpaced gainers by 14 to 13 on the Nasdaq.
Stocks did lose a bit of steam before the open following news that the U.S. economy added 88,000 jobs in April, below the 100,000 expected by Wall Street economists. The latest job report also showed downward revisions of 26,000 to the previous three months data.
Charles Campbell, a trading executive at Miller Tabak, said the report was "more or less in line" with investor expectations, with the "whisper number" circulating around trading rooms being around 80,000.
Yet, overall, "it is surprising that the economy is slowing and that there's still that big appetite for earnings," said Deutsche Bank's Fitzpatrick.
"The economy is slowing and at the end of the day, we're going to need the [Federal Reserve] to come in and cut rates," he said. "The underlying concern is how long are they going to wait."
The Fed, which will meet Wednesday, is expected to leave interest rates unchanged but it might make more room about slowing economic trends in its accompanying statement.
Stocks on the move
Eastman Kodak Co. reported a first-quarter loss of 53 cents a share, or 61 cents on a continuing-operations basis including 26 cents a share in charges. Analysts had forecast a loss of 2 cents a share. It also lowered its forecast of digital earnings from operations by $50 million to a range of $150 million to $250 million.
Starbucks dropped 2.3%. The company late Thursday reported in-line earnings and said it plans to buy back an additional 25 million shares.
Schering-Plough Corp. rose 3%. The pharmaceutical company was upgraded to overweight from neutral at Prudential Equity Group, which said the firm has shown it is willing to take aggressive steps on the deal front.
Treasurys turned higher after the news of weaker-than-expected jobs creation in the latest report. The benchmark 10-year Treasury note last was up 8/32 at 99-27/32 with a yield of 4.648%.
The dollar dropped against its major rivals, then recovered some of its losses after the news of weaker-than-forecast jobs creation.
Gold futures rose Friday, extending its prior-session gains, benefiting from the dollar weakness. Gold for June delivery gained $6.70 to $69010 an ounce on the New York Mercantile Exchange.
Crude futures were lower after the most recent supply data showed high inventories. The June contract last was 8 cents lower at $63.11.
By Nick Godt