updated 12/3/2010 5:42:43 PM ET 2010-12-03T22:42:43

Stocks staged a late afternoon rally after spending most of the day weighed down by an unexpected rise in the unemployment rate. Indexes wound up closing higher for the third straight day.

The Dow Jones industrial average rose 2.6 percent for the week, its best weekly gain since hitting a 2010 high on Nov. 5. The Dow is now just 0.5 percent below that level.

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Materials and energy companies led the rebound. Newmont Mining Corp. gained 3.1 percent and oil field services company Schlumberger Ltd. added 2.5 percent. The dollar fell 1.4 percent against an index of six other currencies. Oil and gold prices rose.

Michael Sheldon, chief market strategist at RDM Financial Group in Westport, Conn. said the relationship between a weaker dollar and stronger stocks followed a recent trend.

Story: Nation’s jobless rate jumps to a seven-month high

"You don't see it every day, but it's a clear inverse relationship: When the dollar goes down, stocks go up," he said.

Industrial and basic materials companies that derive much of their revenue from overseas tend to rise when the dollar falls. That's because their earnings from other countries are worth more in U.S. dollars when the dollar falls against other currencies.

The Dow Jones industrial average rose 19.68, or 0.2 percent, to close at 11,382.09.

The Standard & Poor's 500 rose 3.18, or 0.3 percent, to 1,224.71. The Nasdaq composite index rose 12.11, or 0.5 percent, to 2,591.46.

Stocks spent most of the day in a slump. The Labor Department reported that the unemployment rate climbed to a seven-month high of 9.8 percent in November. Employers added just 39,000 jobs, far below what economists forecast.

Expectations of job growth had risen Wednesday after a report showed that private companies were hiring at the fastest pace in three years. That and strong reports Thursday on retail spending and home sales pushed the Dow Jones industrial average up 356 points in two days.

Of the 30 stocks that make up the Dow, 17 rose. Bank of America Corp. led the index with a 1.5 percent gain. Cisco Systems Inc. was the index's laggard with a 0.8 percent loss.

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The weak jobs report served as a reminder that the recovery is proceeding fitfully. The recession that started in December 2007 ended more than a year ago, in June 2009, according to the National Bureau of Economic Research. But the fallout lingers in the form of a rising unemployment rate. Economists say the economy will have to add up to 300,000 new jobs a month before the unemployment rate drops significantly.

"The U.S. may have to face the fact that unemployment is going to be high for a long time," said Drew Matus, a senior economist at UBS. "There are people who need to be retrained for new jobs and that will take time."

In corporate news, discount retailer Big Lots Inc. fell 5 percent after reporting that its third-quarter income dropped 42 percent.

Rising shares outpaced falling ones by almost two to one on the New York Stock Exchange. Volume was 907 million shares.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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