* Jan jobs growth below forecasts, but Dec revised higher
* Merck shares fall after tepid full-year outlook
* Dell shares soar, sources say co nears buyout
* Indexes up: Dow 0.8 pct, S&P 0.7 pct, Nasdaq 0.7 pct
By Ryan Vlastelica
NEW YORK, Feb 1 (Reuters) - U.S. stocks rose on Friday, with
indexes turning positive for the week as the latest payroll
report indicated the economic recovery remained on track.
Employment grew modestly in January, with 157,000 added in
the month, slightly below expectations for 160,000. Still,
figures for both November and December were revised upwards,
supporting views the economy continues to improve despite a
surprise contraction in fourth-quarter gross domestic product.
"What was really positive was significant revisions up,"
said Darrell Cronk, regional chief investment officer for Wells
Fargo Private Bank in New York. "Particularly in the face of the
fiscal cliff and everything that was going on at that time that
corporate America would just hit the pause button in those
moments, those are some pretty impressive numbers."
With the day's gains, major averages erased their losses for
the week, putting them on track for a fifth straight week of
gains. The S&P 500 is also coming off its best monthly
performance since October 2011.
U.S. consumer sentiment unexpectedly improved last month,
rising more than expected to 73.8.
The pace of growth in the U.S. manufacturing sector picked
up in January to its highest level in nine months, according to
the Institute for Supply Management, which said its index of
national activity rose to 53.1 from 50.2 the previous month.
December construction spending also came in higher than
forecasts, rising 0.9 percent in the month.
Corporate earnings were also in focus, with a trio of Dow
components reporting profits that beat expectations.
Exxon Mobil Corp dipped 0.6 percent to $89.46 after
its results while Chevron Corp was flat at $115.24.
On the downside, drugmaker Merck & Co fell 3.4
percent to $41.76 after a cautious 2013 outlook.
Of the 231 companies in the S&P 500 reporting earnings so
far, 69.3 percent have exceeded expectations, according to
Thomson Reuters data through Thursday morning. That is a higher
proportion than over the past four quarters and above average
Overall, S&P 500 fourth-quarter earnings rose 3.7 percent,
according to the data, above a 1.9 percent forecast at the start
of the earnings season but well below a 9.9 percent profit
growth forecast on Oct. 1.
The Dow Jones industrial average was up 114.67
points, or 0.83 percent, at 13,975.25. The Standard & Poor's 500
Index was up 10.32 points, or 0.69 percent, at 1,508.43.
The Nasdaq Composite Index was up 21.01 points, or 0.67
percent, at 3,163.14.
For the week, the Dow is up 0.7 percent, the S&P is up 0.5
percent and the Nasdaq is up 0.6 percent, putting all three on
track for a fifth straight week of gains.
The S&P advanced 5.1 percent in January, its best monthly
performance since October 2011, with gains driven by a sturdy
start to the earnings season and a compromise in Washington that
postponed the impact of a "fiscal cliff" of automatic spending
cuts and tax hikes that were due to take effect early this year.
Dell Inc was the S&P's top percentage gainer,
rising 5 percent to $13.91 after sources said the company was
nearing an agreement to sell itself to a buyout consortium led
by its founder and Chief Executive Michael Dell and private
equity firm Silver Lake Partners. The sources said a deal could
possibly be announced as early as Monday.
Shares of Zoetis surged in their trading debut after
the company's initial public offering was priced at $26, above
the expected range. After spiking as high as $31.50, it pared
its gains to trade at $30.51.