2:48 PM
S&P 500 posts best week in nine
Addison Ray
By Edward Krudy
NEW YORK | Fri Feb 4, 2011 4:39pm EST
NEW YORK (Reuters) - The S&P 500 posted its best week in nine on Friday as the market defied calls for a pullback, and investors rotated into defensive and lagging sectors in a move that could intensify in coming weeks.
Signs of improvement in the economy and strong corporate earnings have propelled stock prices, but tapering volume, meager gains and declining numbers of advancing stocks pointed to waning buying interest at the end of the week.
January's employment data had a limited impact as job creation was weak but the unemployment rate fell sharply.
Sectors that have posted strong gains recently, such as energy, materials and industrials, showed signs of profit-taking as investors shifted to consumer discretionary and technology shares.
"The market has been getting more selective and the rotation is important," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. "I'm not sure people have it completely figured out yet."
Networking shares were among the leaders after JDS Uniphase
(JDSU.O) posted strong earnings. Its stock rose almost 30 percent and bolstered hopes for strong results from Cisco Systems (CSCO.O) next week.
The Dow Jones industrial average .DJI rose 29.89 points, or 0.25 percent, at 12,092.15. The Standard & Poor's 500 Index .SPX added 3.77 points, or 0.29 percent, at 1,310.87. The Nasdaq Composite Index .IXIC climbed 15.42 points, or 0.56 percent, at 2,769.30.
For the week the Dow rose 2.3 percent the S&P 500 rose 2.7 percent and the Nasdaq gained 3.1 percent.
The S&P's energy sector .GSPE, which has gained the most this year, was among the biggest losers on the day, falling 0.3 percent. Dow component Chevron Corp (CVX.N) dropped 0.2 percent to $97.11.
Consumer discretionary shares .GSPD rose 0.7 percent after recent signs of life in the consumer. Shares in online retailer Amazon.com Inc (AMZN.O) climbed 1.3 percent to $175.93. Consumer shares have lagged the rally since the start of the year.
Strength in technology helped push the Nasdaq to new 3-year highs after the index posted its best week since mid-September, but the move was not broad-based as declining stocks came in just ahead of advancers.
Shares of JDS Uniphase and other optical component makers jumped a day after the company posted solid quarterly results, helped by ever-increasing demand for higher bandwidth in smart phones, tablets and other applications.
JDS Uniphase shares rose 26.9 percent to $22.76.
"The strength in the technology sector today and strong earnings from JDS Uniphase potentially have people bulled up on the prospects of a positive earnings surprise from Cisco next Wednesday," said Steve Claussen, chief investment strategist at online brokerage OptionsHouse LLC.