Stocks shrug off 10% jobless news

Updated: 6:13 p.m. ET

Stocks closed higher on Friday -- not a lot higher -- despite a report showing the U.S. unemployment rate topping 10% for the first time since June 1983.

The rally came as gold briefly hit $1,101.90, but energy prices moved lower in part because of the unemployment report.

The Dow Jones industrials ($INDU) closed up 17 points to 10,023. It was the first weekly close above 10,000 for the blue-chip index since October 2008.

The Standard & Poor's 500 Index ($INX) was up 3 points on the day to 1,069, and the Nasdaq Composite Index ($COMPX) was up 7 points to 2,112.

The major averages all showed gains for the week after two weeks of losses.

The Dow and S&P 500 were up 3.2% for the week; the Nasdaq was up 3.3%.

That the stock market could move higher when the national unemployment rate hit 10.2% in October, higher than expected, might strike some as in bad taste.

Fact is, on Oct. 3, 1982, when the the Labor Department under then-President Ronald Reagan reported that U.S. unemployment in September 1982 topped 10% for the first time since World War II, the Dow was up 1.7%.

• What comes after 10% unemployment?

Friday's jobs report was bad; the details suggested it was worse than the headline numbers indicate. But stocks held their own. 

The market was led higher by airline stocks, which rose as crude oil dropped 2.8% to $77.43 a barrel in New York.

At the same time, metals stocks, especially gold stocks, were strong on gold's bullish performance.

The metal passed $1,100 an ounce Friday morning before fallling back to $1,095.70. Gold was still up $8.40 on the day and up 5.3% for the week. 

Meanwhile, financial stocks were mostly lower, weighed down by another huge loss for Fannie Mae (FNM) and disappointment in results for American International Group (AIG).

Fannie Mae was off 7.1% to $1.04. AIG was down 9.7% to $35.48.

American Express (AXP) was off 1.4% to $37.21 and was the worst performer among the 30 Dow stocks.

The unemployment report hit consumer stocks. Walt Disney was off 1.5% to $28.56.

But health care stocks were largely higher. CNBC's Bob Pisani said traders are betting that a vote on health care legislation this weekend will come up short.

Meanwhile, airline shares were higher; the top five performers in the Dow Jones Transportation Index ($DJT) were airlines -- and package shipper FedEx (FDX). All moved higher on crude's decline.

The index was up 1.1% to 3,852 and was up 6.6% on the week. A big reason: Berkshire Hathaway's proposed merger with Burlington Northern Santa Fe (BNI). The deal sent the stock up 29% on the week to $97.23.

And investors were delighted by two upgrades for General Electric (GE) from Oppenheimer & Co. and Sanford C. Bernstein. The upgrades pushed GE shares up 6.2% to $15.33.

They also cheered improving results for Starbucks (SBUX), up 7.2% to $21.12, and graphics chip maker Nvidia (NVDA), up 7.3% to $13.16.

Starbucks' close was its best since Dec. 24, 2007.

Only 12 of the 30 Dow stocks were higher Friday. The index was held up in large part by Travelers Companies (TRV), GE and IBM (IBM).

At the same time, 250  S&P 500 stocks were higher, along with 55 stocks in the Nasdaq-100 Index ($NDX.X). The index was up 10 points to 1,731.

Another 190,000 job losses

The economy shed 190,000 jobs in October, the Labor Department said in its monthly report, more than the expected loss of 175,000 jobs. October was the 22nd consecutive month of job losses.

The jobless rate jumped to 10.2% last month from 9.8% in September -- the highest rate since April 1983. Economists had estimated a jobless rate of 9.9%.

A total of 7.3 million jobs have been lost since the recession began in December 2007 -- one of every 20 private-sector positions.

• Read more about the jobs report

One glimmer of hope was that payrolls in August and September were revised higher by 91,000 jobs.

"Historically, revisions to past data have moved in the direction of changes in overall trends, so up revisions to the recent past suggest stronger conditions are developing," David Resler, chief economist at Nomura Securities, wrote in a research note. "The details reinforced the impression that the job loss pace is slowing."

But Philippe Dunne and Doug Henwood of the Liscio Report noted that the average workweek continued to run at a historically low 33 hours. Workers remain without jobs for a median of 18.7 weeks and an average 26.9 weeks.

An unemployed person in September had a 19.2% chance of finding a job in October, an all-time low, they noted.

Some good news: Average wages were up slightly. Temporary employment showed an uptick, and retailers seemed to need workers.

Gold tops $1,100 an ounce

Gold briefly crossed above $1,100 an ounce this morning before pulling back to just under $1,096. Gold has been surging as the U.S. dollar has fallen and as investors look to protect themselves against inflation.

"We believe the rally in gold prices will continue," Michael Lewis, an analyst at Deutsche Bank, wrote in a report Friday.

"Further advances in the gold price will be based on fresh lows in the U.S. dollar, central bank buying of gold (and) increasing inflation volatility."

Newmont Mining (NEM) was up 3.8% to $49.04. Freeport-McMoRan Copper & Gold (FCX) was up 0.1% to $79.56.

Elizabeth Strott contributed to this report.