US stocks rallied, pushing the Dow Jones Industrial Average to its biggest gain in more than nine months. Computer-related shares, including Intel Corp, jumped amid speculation their earnings will grow this year.
In a shortened trading day following the Independence Day holiday, 29 of the Dow's 30 companies rose and the average climbed for the first week in seven. Shares at their lowest in at least five years, such as AT&T Corp and Hewlett-Packard Co, surged.
"It is time to jump into the market," said Benjamin Pace, who oversees US$7 billion in stocks at Deutsche Bank Private Banking. "Earnings forecasts for the third and fourth quarters and comparisons should be very good."
The Dow rose 324.53, or 3.6 percent, to 9,379.50, the largest advance since Sept. 24. Only Coca-Cola Co, the Dow's top gainer this year, fell. The S&P 500 added 35.04, or 3.7 percent, 989.03.
Technology shares contributed a quarter of the rise. The NASDAQ Composite Index jumped 68.19, or 4.9 percent, to 1,448.36.
For the 3 1/2 day-trading week, the Dow gained 1.5 percent.
The S&P 500, which on Tuesday reached its lowest close since January 1998, recovered to drop 0.1 percent. It slid 4.2 percent the first two days of the week. The NASDAQ shed 1 percent.
The New York Stock Exchange said trading totaled 699.5 million shares, 49 percent below the year's daily average. Markets were closed on Thursday for a holiday.
Analysts predict that earnings for companies in the S&P 500 will rise an average 16.7 percent this quarter and 28.6 percent next quarter, according to Thomson First Call. Investors are betting that companies will increase their spending on computer-related equipment once their profits rebound.
Some investors said the absence of a terrorist attack, against which government officials beefed up security July 4, helped shore up investor confidence.
Still, after 2 1/2 years of declines in benchmark indexes and the S&P 500's worst first-half since 1970, "It's going to take a lot of these days to get anyone excited about stocks again," said Brian Kirkpatrick, a manager at Bridges Investment Counsel in Omaha, Nebraska, which oversees US$2 billion.
After a 14 percent decline this year, the S&P 500 Index sells for 19 times expected earnings. That means stocks are less expensive than they were after the Sept. 11 attacks and cheaper than they were after the 1998 collapse of the Long Term Capital Management hedge fund.
Friday's rally came after the US Labor Department said payrolls rose by 36,000 last month compared with the 75,000 forecast. The June unemployment rate rose to 5.9 percent from 5.8 percent, matching analysts' projections.
"It's slightly disappointing," Pace said. "Clearly, from an economic standpoint we are not in a horrible situation. We are still growing jobs and the consumer still has money in their pocket to spend."
Pace has been buying home-improvement chain Home Depot Inc, energy company Noble Corp and Banc of America Corp.
Intel, the world's biggest semiconductor maker, jumped US$1.79 to US$19.54. Its shares have fallen 38 percent this year.
International Business Machines Corp the world's largest computer maker, gained US$2.99 to US$73.50. The stock has lost 39 percent this year.
HP gained US$1.08, or 7.1 percent, to US$16.30. AT&T added US$0.57, or 5.9 percent, to US$10.19. Twelve of the Dow's 30 stocks are lower than they were on July 5, 1997.
Chip and chip-equipment stocks rose after analysts said the industry may rebound because electronics makers will need to replenish inventories soon. Shares also got a boost after Fortis Bank analyst Jeroen Bos said the semiconductor-equipment industry has improved in the past six months and is poised for a recovery.
The Philadelphia Semiconductor Index had its biggest gain since May 8, adding 9 percent. Micron Technology Inc added US$1.81, or 8.8 percent, to US$22.31. LSI Logic Corp gained US$0.81, or 11 percent, to US$8.41.
Advanced Micro Devices Inc rose US$0.91, or 11 percent, to US$9.34 Investors said an absence of bad news may help extend gains.
General Electric Co and Citigroup Inc added the most to the S&P Index. General Electric climbed US$1.79 to US$29.69, trimming its loss for the year to 26 percent. Citigroup added US$2.54 to US$39.55.
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