Market’s Gain for Week Is the Strongest in 2 Years

By THE ASSOCIATED PRESS
Published: December 2, 2011

An early stock market rally fizzled on Friday but still left the Standard & Poor’s 500-stock index up 7.4 percent for the week, its biggest gain since March 2009.

A surprise drop in the nation’s unemployment rate sent stocks higher in early trading, but the gains faded during the afternoon.

The Dow Jones industrial average fell 0.61, to 12,019.42. The Dow ended the week up 7 percent, its largest weekly gain since July 2009.

Bank stocks rose sharply, continuing a weeklong rally. Shares of JPMorgan Chase jumped 6.1 percent, the most among the 30 stocks in the Dow average. Morgan Stanley shares leapt 6.9 percent, the second-biggest gain of any stock in the S.& P. 500 index.

European stock indexes and the euro rose after the German chancellor, Angela Merkel, made a speech pushing for tighter rules on government spending. Mrs. Merkel said the 17 countries that use the euro must quickly restore market confidence by making financial controls stricter.

Bond yields for Spain and Italy fell, a sign that investors were becoming more confident in the ability of those countries to pay their debt.

The CAC-40 in France and the FTSE 100 in Britain each rose more than 1 percent.

Rates in the United States were lower. The Treasury’s 10-year note rose 15/32, to 99 23/32, and the yield fell to 2.03 percent from 2.08 percent late Thursday.

The Labor Department reported before the market opened that the unemployment rate fell to 8.6 percent last month, the lowest level in 2.5 years. Economists had expected the rate to remain 9 percent.

A big reason the rate fell so much, however, was that more than 300,000 people gave up looking for work and were no longer counted as unemployed.

The Nasdaq composite index inched up 0.73, to 2,626.93. The Standard & Poor’s 500-stock index fell 0.31, to 1,244.28. Decisive steps by world leaders to right Europe’s teetering economy sent stocks soaring on Wednesday.

The Dow jumped 490 points, its biggest gain since March 2009 and its seventh-largest one-day point gain in history. The weekly point gain of 787 in the Dow was the second-biggest in its history, following a 946-point gain in October 2008.

“This market has been gripped with fear for a long time,â€