NEW YORK: US stocks ended the week higher but it was hardly smooth sailing for investors as the markets remained choppy for a second week in a row.
The Dow posted a double-digit loss Tuesday and each of the major indices fell by more than 1 percent Wednesday. Markets recovered somewhat on Thursday, but only after a mid-session plunge.
The markets closed the week on an upbeat note after the US economy added more jobs than expected in May.
At Friday's close, the Dow ended 132.55 (0.88 percent) higher for the week at 15,248.12.
The broad-based S&P 500 rose 12.64 (0.78 percent) to 1,643.38, while the Nasdaq Composite Index added 13.31 (0.39 percent) to 3,469.22.
"It has been a very volatile week," said Hugh Johnson of Hugh Johnson Advisors.
The market's gyrations could be explained by the trove of economic data released, which included plenty of surprises.
For example, Wednesday's release from payroll firm ADP showed the US private sector added just 135,000 jobs in May, far less than the 157,000 expected.
But Friday's job report showed the US economy added 175,000 jobs in May, above the 159,000 expected by analysts.
Markets had been betting on a weaker jobs report Friday, said Michael James of Wedbush Morgan Securities. The report sent investors scurrying.
"When the data goes counter to where people are positioned, the market is going to go counter to where those positions are," James said.
James expects the volatility to continue in the coming weeks in light of the mixed economic outlook and low trading volume during the summer months, which can accentuate market moves.
Stocks moved last week "in lockstep with the news," said Johnson.
That has not always been the case. Until recently, market watchers commonly characterized investors' philosophy as being "bad news is good news" because weak economic reports meant the Federal Reserve would continue its aggressive bond-buying program.
But the Fed in recent weeks has signaled that it expects its bond-buying program, known as quantitative easing, to be tapered in the foreseeable future.
The market is "acknowledging that tapering will begin in six months or earlier," said Sam Stovall, chief investment strategist for Standard & Poor's.
As a result, "the market has gone through a painful metamorphosis" to being "fundamentally driven rather than liquidity driven," he said.
Exactly when the Fed scales back the program is of keen interest, not only to stock markets, but also to bond markets, which have retreated as speculation has grown about the end of the program.
Several analysts said Friday's job report would not hasten the Fed's timing.
The report "reflects improvement in the economy, but not so much improvement as to suggest the Fed will alter its policy course," said Briefing.com analyst Patrick O'Hare.
The next big Fed meeting is not until June 18-19.
The week to come includes releases on retail sales, industrial production and the producer price index.
Johnson spotlighted the PPI as particularly important, not so much because inflation constitutes a serious worry, but because of concerns about deflation.
"Inflation is getting too low, and if inflation migrates toward deflation, we're going to have big problems," Johnson said.
<Center><b><i>Copyright AFP (Agence France-Presse), 2013</b></i></center>
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