New York ? Wall Street capped a week of big gains with another sizable advance Friday after investors set aside anxiety over news that the economy lost jobs last month and focused on Microsoft Corp.’s bid for Internet company Yahoo Inc. and a possible rescue plan for the troubled bond insurance sector.

The Dow Jones industrial average rose 92.83, or 0.73 percent, to 12,743.19 after climbing more than 200 points Thursday.

Broader stock indicators also moved higher. The Standard & Poor’s 500 index rose 16.87, or 1.22 percent, to 1,395.42, and the Nasdaq composite index advanced 23.50, or 0.98 percent, to 2,413.36.

The Dow Jones industrial average and the Standard & Poor’s 500 index each posted their steepest weekly gains since March 2003: The Dow jumped 536.02 points, or 4.4 percent, while the S&P 500 index, the market measure most closely followed by professional traders, added 4.9 percent.

The Nasdaq composite index rose 3.8 percent doe the week.

The week’s gains restored some of the huge losses seen in the earliest days of the year. Still, stocks this week finished what was their worst January since 1990. The Standard & Poor’s 500 index lost 6.1 percent for the month.

Stocks fluctuated at times Friday, however, as investors weighed seemingly contradictory readings on the economy.

Wall Street was pleased by Microsoft’s $44.6 billion bid for Yahoo, as Merger news – which often energizes stocks – has been in short supply for months. But Friday’s mix of economic news reminded investors of the continuing fallout from the housing and mortgage crisis.

The first blow came from the Labor Department’s worrisome employment report for January. The economy lost 17,000 jobs, marking the first contraction of the labor market in more than four years. The news confounded economists, who were expecting 70,000 new jobs, according to Thomson/IFR. The unemployment rate fell to 4.9 percent from 5 percent in December, though the move came as the labor pool shrank.

The Commerce Department added to the fray, reporting that construction spending dropped 1.1 percent in December – the biggest decline in 15 months and twice what analysts had expected.

And rating agency Moody’s Investors Service warned Friday that it expects to downgrade some bond insurers this month. A top rating is crucial for bond insurers to draw new business and for investors to feel secure about the bonds these companies already insure.

Stocks did get some ballast from a report showing a pickup in the nation’s manufacturing sector in January. The Institute for Supply Management, a business group, said its index of manufacturing activity rose to 50.7 from 48.4 in December. Wall Street had expected the figure would come in at 47, a reading that would indicate a contraction of the manufacturing sector.

“We’re starting to see the long-term investors and the fund mangers come back into the market,” said Marc Pado, U.S. market strategist for Cantor Fitzgerald. “That’s why I think you’re seeing stocks rally even when there is negative news.”

Bond prices slipped in late trading Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.60 percent from 3.59 percent late Thursday.

The dollar rose against most other major currencies, while gold prices fell.

Light, sweet crude oil fell $2.79 to settle at $88.96 per barrel on the New York Mercantile Exchange after the employment report raised concerns that the U.S. economy will slow and hurt demand for oil.

Bond insurers showed gains Friday amid word that efforts are moving ahead to aid the troubled bond insurance market, though no proposal was imminent.