Stocks soared to new highs for the year Friday after investors got reassuring news from the employment front.
The Dow Jones industrial average rose 113.81, or 1.2%, to 9,370.07 after the government said unemployment fell for the first time in 15 months in July. Employers cut 247,000 cuts, much fewer than expected.
The Labor Department also said the unemployment rate dropped to 9.4% from 9.5% in June. Economists forecast the rate would rise to 9.6%.
Meanwhile, thanks to big jumps in stocks in the broadcasting, real-estate investment trusts and homebuilding industries, preliminary figures show the Standard & Poor's 500 gained 13.40, or 1.3%, to 1,010.48.
Tech continues to be strong; the Nasdaq composite index rose 27.09, or 1.4%, to 2,000.25.
The gains by stocks this year have been head-turners. The Dow, S&P 500 and Nasdaq are up 6.8%, 11.9% and 26.8% respectively.
The Dow Jones industrial average rose 114 points to cap its fourth straight weekly gain. The Dow is at its highest level since early November.
With the pop Friday, the S&P 500 index is up 14.9% in only four weeks and 49.4% from a 12-year low in early March.
For the week, the Dow added 2.2%, the S&P 500 index rose 2.3% and the Nasdaq rose 1.1%.
The market's biggest fear, jobs, is now shifting to missing out on the market's rally, says Todd Clark of Nollenberger Capital. "Higher (stock) prices are forcing people back in who may have not caught this thing," he says. "They have to show they're participating. It forces people's hands."
Many investors, who have doubted the market's rally and waited for a pullback, are losing reasons to be skeptical, says Todd Salamone at Schaeffer's Investment Research. The jobs number "was reason for some (investors) to buy into the rally instead of waiting for a pullback," he says.
Still, Salamone says there's enough doubt of the rally to potentially push it higher as bears are convinced. "There's still a strong contingent of folks who are missing this rally, and that represents money that can drive it higher," he says.
Still, some analysts say the gains have come too quickly and question whether an economic rebound can ever live up to the expectations investors are now setting.
"We've run very fast, very quickly," said Marc Harris, co-head of global research for RBC Capital Markets in New York. "I think we're due to take a breath."
In corporate news, embattled insurer American International GroupAIG posted its first quarterly profit since 2007. The insurance giant, which is now majority owned by the government, reported a profit of $1.82 billion in the second quarter as some of its businesses stabilized.
The government has provided AIG with a loan package worth up to $182.5 billion and received an 80% stake in the firm after bailing it out at the peak of the credit crisis last fall.
Meanwhile, bond prices fell as the jobs reading limited demand for the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.86% from 3.76% late Thursday.
Light, sweet crude fell $1.01 to settle $70.93 a barrel on the New York Mercantile Exchange.
The Russell 2000 index of smaller companies rose 14.78, or 2.7%, to 572.40.
The dollar mostly rose against other major currencies, while gold prices advanced.
Overseas markets also rallied on the U.S. jobs report. Britain's FTSE 100 rose 0.9%, Germany's DAX index gained 1.7%, and France's CAC-40 rose 1.3%. Early Friday, Japan's Nikkei stock average closed with a gain of 0.2%.