Report : DJIA's Fireworks: Best Week in Two Years

The Wall Street Journal
U.S. stocks notched their biggest weekly jump in two years, as investors pounced on fresh data suggesting the economy could be slogging its way out of its recent malaise.
The Dow Jones Industrial Average ended up up 168.43 points, or 1.4%, to 12582.77 on Friday, for a 5.4% gain for the week, its best performance on a percentage basis since July 2009.
By points—the Dow tacked on 648.19 in five days—the Dow had its best week since November 2008. Stocks surged pushing the Dow to its biggest weekly gain in two years, as a strong reading of manufacturing activity lifted investor spirits ahead of the long holiday weekend.
Investors may be optimistic that the second half of the year will bring greater economic growth but Dow Jones NewsPlus's Tomi Kilgore says that may be just wishful thinking.
Driving the gains was an easing in anxiety over the U.S. economy and Europe's debt troubles.
On Friday, an update on the U.S. manufacturing sector showed brisk expansion in June, representing one of the month's first prominent readings on the economy.
The report was especially well-taken a day after a regional manufacturing survey of Chicago-area purchasing managers for June that also handily beat economists' expectations.
"This is a great indication that the manufacturing sector is turning around," said Peter Cardillo, chief market economist at Avalon Partners.
"I expect manufacturing will take us out of the soft patch and lead economic growth in the second half of the year."
For months, a cascade of disappointing U.S. economic numbers had put investors in a sour mood. And in recent weeks, the sight of an increasingly chaotic European debt crisis added a hefty pinch of jitters to the global mix. Before this week, the Dow had declined in seven of its previous eight weekly runs.
Even after this week's surge, many investors warned that the economy, and Europe, are far from out of the woods.
Big tests will come next week when the U.S. Labor Department releases non-farm payrolls for June.
Data released over the past month has shown a soft labor market, leading some to worry the jobs number could be weak.
"Sentiment has rapidly changed, but the jobless situation is getting worse, not better," said Ben Halliburton, chief investment officer at Tradition Capital Management.
"At this stage in the recovery, it makes you question whether there's actually a recovery taking place." Beyond the economy, considerable uncertainty remains surrounding the long-term outlook for Greece and, closer to home, the Federal Reserve has just ended its bond-buying program, widely known as QE2, which pumped $600 billion into financial markets. Political wrangling over raising the government's debt ceiling is likely to heat up ahead of the Aug. 2 deadline set by the Treasury department.
"Over the next few months the market's going to face another period of angst related to the debt ceiling," Mr. Halliburton said. "Right now, the market doesn't care. But there's no easy way out. A lot of people are going to be mad with whatever decision is ultimately made."
But for now, investors have reverted snapping up riskier assets like stocks and dumping their traditional safe havens like Treasury bonds.
The past week for Treasurys was the mirror opposite of that for stocks.
The 10-year note had one of its steepest weekly declines in two years, giving ammunition to those who say the months-long bull run for government debt is coming to an end.
The 10-year yield, which rises as prices fall, shot up by 0.33 percentage point, the sharpest weekly rise since August 2009.
In late afternoon New York trading on Friday, it was at 3.199%, its highest yield since May 12.
As the move rolled through the week, Goldman Sachs on Thursday declared the recent rally in bonds over.
That view was echoed by several market participants.
Others are more cautious, describing the selloff as little more than a correction.
"I don't think this is the beginning of a bear market," said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading in New York at Deutsche Bank's private-wealth-management unit.
He said yields will stay where they are until the economy strengthens, which could take a couple more months.
Friday's bond-market selloff came on light volume ahead of the long holiday weekend.
Market moves on light volume are typically considered less telling than moves that are confirmed by heavy trading.
In the stock market, trading also was less than robust.
Some 3.42 billion shares changed hands in New York Stock Exchange composite volume, roughly 12.5% below the average June volume.
Shares of Eastman Kodak skidded 51 cents, or 14%, to $3.07, after the U.S. International Trade Commission ruled against the company in its patent dispute with Apple and Research in Motion. Apple shares rose 7.59, or 2.3%, to 343.26, while Research in Motion rose 8 cents, or 0.3%, to 28.93.
Dendreon rose 1.96, or 5%, to 41.40, after the drug maker said its Provenge prostate-cancer treatment received approval to be covered by Medicare.
Apollo Group's fiscal third-quarter adjusted profit fell less-than-expected as expenses for the for-profit college operator declined.
Shares rose 2.78, or 6.4%, to 46.46.
Activist investor Carl Icahn reported a 9.51% stake in specialty-vehicle maker Oshkosh and said he intends to seek out management to discuss ways to enhance shareholder value.
Oshkosh shares jumped 4.01, or 14%, to 32.95.
Darden Restaurants' fiscal fourth-quarter earnings rose 19% and the casual-dining chain gave strong earnings and revenue guidance for fiscal 2012.
Shares rose 3.03, or 6.1%, to 52.79.