U.S. Stocks Finish Best Week Since November

 By Paul Vigna and Caitlin Ostroff 

U.S. shares rose Friday, with the S&P 500 notching its best week since November, as investors pivoted to focus on a possible new stimulus package and shook off some of the razzmatazz in individual stocks that marked the previous month of trading.

The Dow Jones Industrial Average gained 0.3% to 31148. The S&P 500 climbed 0.4%, hitting a record high for the second day in a row. The benchmark is up more than 4.6% this week, its biggest one-week gain since the week ending Nov. 6.

The tech-heavy Nasdaq Composite rose 0.6% to a record and also closed its best week since Nov. 6.

The heavily traded stocks at the center of a social-media spectacle have lost some of their steam. GameStop rose 19%, after falling by 30% or more for three of the previous four trading days. It’s down 80% for the week, but still up more than 200% for the year.

AMC Entertainment Holdings fell 3.7%. Popular trading app Robinhood Markets removed the last of its trading limits on shares of both companies, according to its website.

Another heavily shorted stock, Koss, rose 6.3%.

Friday’s broad increases were a marked change from the previous week, when GameStop soared 400% but stocks suffered their worst week since October. Markets seesawed throughout January, including into last week, buffeted by up-and-down news about the state of the U.S. economy and the online-trading spectacle epitomized by GameStop.

Friday, investors bet that a relatively weak jobs report would help guarantee a fresh stimulus bill.

The Labor Department reported that employers added 49,000 jobs in January, and the jobless rate edged lower to 6.3% from 6.7% the month prior. Still, many sectors lost jobs last month, including leisure and hospitality, retailers, health-care companies and warehouses.

“It’s because of the ongoing issues around Covid and the dislocations in the economy,” said Saira Malik, the chief investment officer of Nuveen Equities. Still, she thought the data was more of a “rearview mirror” look. New coronavirus cases are trending down, vaccines are being distributed, and more government aid is likely. “All of that gives investors confidence,” she said.

Many investors believe that the relatively weak jobs report Friday will bolster the odds of a government stimulus package gaining approval. The market has rallied this week as President Biden pushed ahead with efforts to pass a $1.9 trillion relief package. Democrats are using a special procedure to move ahead on the stimulus bill: The Senate on Friday approved a budget plan that advances the reconciliation process necessary to get the aid plan approved with a simple majority in the Senate.

The House on Friday approved a budget bill advancing Mr. Biden’s stimulus plan, a further step toward making the relief package a reality.

The fresh spending is viewed by many investors as crucial for shoring up the economy, with coronavirus cases still high across parts of the U.S.

“That would be a huge boost to the economy.” said Edward Smith, head of asset allocation research at Rathbone Investment Management. “It certainly reduces any short term risk as we wait for the vaccine rollout to get fully up to speed.”

Investors remain focused on the rollout of Covid-19 vaccines, which could accelerate the speed of economic recovery. Johnson & Johnson asked U.S. regulators on Thursday to authorize the emergency use of its single-shot Covid-19 vaccine, setting the stage for a potential third vaccine to become available in the U.S. within weeks.

“The more vaccines get rolled out, the more people are going to start moving around,” said Gregory Perdon, co-chief investment officer at private bank Arbuthnot Latham.

Shares of Johnson & Johnson rose 1.5%.

Volatility in markets has also declined somewhat this week, after soaring at the end of January to its highest level since late…