Stocks whipsaw on Italian debt deal

NEW YORK — US stocks were up in mid-afternoon trading on Friday, as a better-than-expected US jobs report and hints of progress in Europe's debt crisis bolstered a volatile day in the markets.

The Dow Jones Industrial Average rose 134.04 points (1.2 percent) to stand at 11,517.72 at 1800 GMT.

The broader S&P 500 was up 11.58 points (1.0 percent) to 1,211.58, while the tech-heavy Nasdaq Composite rose 5.73 points (0.2 percent) to 2,563.12.

Stocks experienced wild swings after the US Labor Department reported that the country's economy generated 117,000 jobs in July, an improvement that cut the official US unemployment rate down a notch to 9.1 percent.

Economists had forecast only a net 84,000 jobs generated.

"The employment report turned out better than expected and certainly better than feared," said Patrick O'Hare, an analyst with Briefing.com.

However, he also cautioned: "The fact remains that the pace of job growth is still not sufficient enough to produce a meaningful change in the unemployment rate.

Stocks got a boost in afternoon trading on reports the European Central Bank had agreed to purchase Italian bonds in exchange for massive budgetary concessions from the Mediterranean country.

Italy was quickly becoming the latest domino to potentially fall in the eurozone, and the concern among investors is that Italy -- the eurozone's third-largest economy -- may be too large to save.

"The crisis in Europe is quickly becoming on par with the financial crisis of 2008," said David Levy, portfolio manager at Kenjol Capital Management.

"The jobs report shows that things aren't getting much worse in the U.S., but the focus is clearly on Europe at this point," Levy said.

Friday's volatility follows the plunge stocks experienced on Thursday, with the Dow tumbling 512 points. It was the steepest point loss since October 2008 -- as fear about the global economy spooked investors.

All three major indexes have erased their gains for the year and now are deep into "correction" territory -- defined as a 10% drop from recent highs.

Economy: Investors' confidence had been partly renewed Friday, after the Labor Department said the U.S. economy gained 117,000 jobs in July. Economists surveyed by CNNMoney were expecting an increase of 75,000 jobs.