A strong rebound in hiring, which eased worries that the U.S. economy is slowing too sharply, helped put traders in a buying mood. The jobs report also hit a happy medium for markets, strategists said. It was neither low enough to heighten recession worries nor high enough to prod the Federal Reserve to raise interest rates.
"The big driver now over the next few weeks will be earnings," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "The bar is low, expectations are low, and that sets the market up for maybe some modest upside."
The S&P 500 rose 13.35 points, or 0.5%, to 2,892.74. The Dow Jones Industrial Average gained 40.36 points, or 0.2%, to 26,424.99. The Nasdaq composite climbed 46.91 points, or 0.6%, to 7,938.69. The Russell 2000 index of smaller company stocks picked up 15.06 points, or 1%, to 1,582.56.
The S&P 500 has climbed every day this week, though most of the gains were only modest, and it now sits just 1.4% away from its most recent record high, which was set in September. The index has been tacking on more gains since closing out its best quarter in nearly a decade, with a 13.1% rise in the first three months of the year.
On Friday, traders drew encouragement from the government's latest monthly tally of hiring. The Labor Department said that U.S. employers added 196,000 jobs last month, more than economists had forecast. The strong rebound suggests the prior month's jobs report, which was shockingly weak, may have been an aberration and that the economy can continue to grow, albeit at a slower pace.
"This is another green shoot of growth," Steve Chiavarone, portfolio manager and equity strategist at Federated Investors, who pointed to other encouraging data about the U.S. and China's economies from recent weeks. He expects economic growth to re-accelerate after hitting a bottom in the first part of 2009.
And with the Fed on record saying it may not raise rates at all this year, after having done so four times in 2018, "good news now is just good news," Chiavarone said. That's unlike prior market scares, when investors saw strong data as bad news because it could encourage a more aggressive Fed. The mentality flipped earlier this year after the Fed said it may not raise rates at all this year after raising them four times in 2018.
The unemployment rate last month remained near a 50-year low of 3.8%. Average hourly earnings rose 3.2% in March from a year earlier, which was weaker than economists' forecasts. Markets pay close attention to the numbers because while higher wages help workers afford to buy more things, they also crimp corporate profit margins.
Profitability is one of the market's top concerns as companies line up to begin reporting their first-quarter results next week. Analysts expect companies in the S&P 500 to report a nearly 4% drop in earnings per share from a year earlier, which would be the first decline since the spring of 2016.
The expected drop in profits is due almost entirely to weaker profit margins. Analysts are forecasting that revenue grew nearly 5% for S&P 500 companies during the quarter. Companies are holding on to less of each $1 of revenue as profit than a year ago, analysts say.
Health care and technology companies helped pulled the market higher Friday. Cigna rose 2.9% and Lam Research added 2.2%. Energy stocks in the S&P 500 jumped 1.7%, by far the biggest gain among the 11 sectors that make up the index.
Apache jumped 6.6%, EOG Resources rose 5.3% and Anadarko Petroleum added 4.3% as energy-related stocks plowed higher with the price of crude oil. The strong jobs report helped expectations for oil demand, and benchmark U.S. crude rose 1.6% to settle at $63.08 a barrel. Brent crude, the international standard, added 1.4% to close at $70.34.
Treasury yields wavered following the jobs report. The yield on the 10-year Treasury tends to rise and fall with expectations for the U.S. economy and inflation, and it had been largely falling since last autumn as worries about a possible recession grew. After hitting a bottom at 2.37% last week, though, it had begun to recover.
On Friday, the yield on the 10-year Treasury climbed as high as 2.54% in the minutes following the job report's release, up from 2.51% late Thursday. But the gains evaporated, and it subsequently dipped down to 2.49%.
The yield on the two-year Treasury, whose movements are more closely tied to the Fed's actions, also bounced up and down following the jobs report. It rose to 2.33% from 2.32% late Thursday. Major indexes in Europe finished higher, led by Britain's FTSE 100. The index rose 0.6% after Prime Minister Theresa May requested a further Brexit extension from the European Union until June 30 to give the U.K. breathing room since it is now scheduled to leave the bloc in just one week.
European Council President Donald Tusk proposed a longer time frame, urging the 27 other EU nations to offer the U.K. a flexible extension of up to a year to make sure the nation doesn't crash out of the bloc in a chaotic and costly way.
The CAC 40 in France and Germany's DAX each rose 0.2%. The dollar rose to 111.71 yen from 111.58 yen on Thursday. The euro weakened to $1.1218 from $1.1221. Gold inched 0.1% higher to $1,295.60 an ounce, silver was little changed at $15.09 an ounce and copper fell 0.5% to $2.89 a pound.
In other energy futures trading, wholesale gasoline rose 1.5% to $1.97 a gallon, heating oil picked up 1.4% to $2.04 a gallon and natural gas gained 0.8% to $2.66 per 1,000 cubic feet.
AP Business Writers Stan Choe and Elaine Kurtenbach contributed to this report.