Will the Street Take a Breather?

The recent rally has been fueled by a string of upbeat economic reports. But next week's data and earnings calendar is light

Stocks finished Friday with solid gains in the wake of a U.S. labor market report that far exceeded Wall Street expectations.

The Dow Jones industrial average gained 47.12 points, or 0.45%, to 10,572.49. The tech-heavy Nasdaq composite index was up 48.04 points, or 2.55%, to 1,929.67. The broader Standard & Poor's 500 index gained 6.77 points, or 0.58%, to 1,164.30.

Non-farm payrolls in February rose by 66,000 for the month -- the first monthly gain since last July. And the U.S. unemployment rate fell to 5.5%, down from 5.6% in January. S&P's economic research unit MMS had predicted a rise in the jobless rate to 5.8%. Average hourly earnings ticked up 0.1%. Hiring in the areas of construction, retail and other service sectors drove the non-farm payrolls figure.

The February jobs report is the latest in a string of positive economic updates. Along with recent optimistic comments from Federal Reserve Chairman Alan Greenspan, many analysts see a recovery already underway. And they say that owning stocks is a must now that the economy appears to be on the upturn and corporate profits should begin to improve.

Markets could move in a more orderly fashion, analysts say, with a lighter pile of economic reports due next week and few earnings reports.

January wholesale inventory data are expected Monday. The week's most important report, February retail sales, is set for Wednesday. On Thursday, January business inventories, along with fourth-quarter current account data, are due. On Friday investors will get March consumer sentiment numbers, along with the February producer price index and industrial production and capital utilization data.

On the corporate docket next week, the most noteworthy earnings releases come from the tech sector. Software giants Oracle (ORCL ) and Adobe (INTC ) are set to release results after the close of trading Thursday.

On Friday, investors cheered the latest earnings guidance from Dow member Intel (INTC ). After the market close Thursday, Intel narrowed the range of revenue guidance for its first quarter -- from numbers it provided in January -- to between $6.6 billion to $6.9 billion, which was not too far off its previous forecast of $6.4 billion to $7.0 billion in revenues.

Network computer maker Sun Microsystems (SUNW ) stock was higher after it reaffirmed plans to boost revenue slightly and move closer toward profitability in its third quarter ending in March.

Separately, Sun said it filed a private antitrust suit against Microsoft Corp. (MSFT ) in the U.S. District Court in San Jose, Calif., seeking damages for harm it claims was done to its business. Sun says Microsoft has engaged in anti-competitive conduct, which stems in part from the software company's decision to ship Windows XP without support for Sun's Java software.

Wall Street darling Krispy Kreme Doughnuts (KKD ) said its fourth-quarter profits rose 94% from last year on higher sales and new store openings. The company also changed some management practices -- and added two outside directors to its board -- to bolster investor confidence, according to a press report.

Financial stocks were also on the move Friday with investment banks revising their outlooks for several companies. Merrill Lynch's analyst recommended that investors buy shares in regional banks. An analyst at Salomon Smith Barney cut the ratings of several brokerages due to valuation concerns, lack of a clear outlook and a decline in merger and acquisition activity.

In other news, shares of biotech concern Biogen (BGEN ) ended lower after the FDA's approval of a rival drug for its Avonex multiple sclerosis product.

Shares of Genzyme Corp. (GENZ ), a biotech that focuses on rare diseases, gained ground after company said fourth-quarter profit rose 9%, with help from strong sales of its Renagel kidney dialysis drug.

Treasury Market

U.S. Treasuries finished lower in price after the positive payrolls report and the rally in stocks. The latest economic indicators have been pointing to an economic recovery and that's been good news for stocks. Treasuries could keep getting hit as long as the good news keeps coming.

S&P economists expect that the interest-rate policy-setting Federal Open Market Committee will likely move its bias to neutral by its next meeting on Mar. 19 and to tightening by May 7. Still, S&P sees rates at current levels until the fall.

World Markets

European markets ended higher amid strength in U.S. stocks. In London, the FTSE 100 index gained 3.60 points, or 0.07%, at 5,285.70. In Germany, the DAX index added 70.12 points, or 1.33%, to 5,359.55. In France, the CAC 40 index gained 12.61 points, or 0.27%, to 4,629.11.

Asian stocks ended higher as growing hopes of a U.S. economic recovery drove stock gains. In Japan, the Nikkei 225 index soared 237.45 points, or 2.04%, to 11,885.79. In Hong Kong, the Hang Seng index added 45.16 points, or 0.40%, to 11,233.23.

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