US stocks rallied on Friday after tepid growth in the number of new jobs added in January showed improvement in the economy, but was mild enough to ease fears of an imminent interest-rate hike.
The job report helped push the Nasdaq to its biggest daily percentage gain since November. But technology stocks ended the week lower, while the Dow Industrials and S&P 500 finished the week higher.
Intel Corp and Caterpillar Inc led the Dow higher, while US-traded shares of Swedish telecommunications equipment maker Ericsson gave technology issues a lift.
The government reported on Friday that 112,000 nonfarm jobs were created in January, below Wall Street's average estimate of 150,000.
That indicated the recovery is moving in the right direction, but not so quickly that the Fed will be forced to hike interest rates to cool an overheating economy.
"It was kind of that Goldilocks 'not too high, not too low, but just right' job number that the market looked for to say, 'We can breathe a sigh of relief here,'" said Jeff Kleintop, chief investment strategist at PNC Advisors.
"It says the Fed may be able to wait a while and the inflationary pressures are going to be slower to build."
The Nasdaq Composite Index surged 44.45 points, or 2.2 percent, to 2,064.01, according to the latest data, notching its biggest daily percentage gain since late November.
The Dow Jones industrial average rose 97.48 points, or 0.93 percent, to 10,593.03. The broader Standard & Poor's 500 Index gained 14.17 points, or 1.26 percent, to 1,142.76.
Volume was active with 1.46 billion shares traded on the New York Stock Exchange and 1.85 billion changing hands on the Nasdaq. Advancers outnumbered decliners by about 3 to 1 on the NYSE and the Nasdaq.
For the week, both the Dow and the S&P 500 registered gains of 1 percent.
But the Nasdaq fell 0.10 percent, marking its third down week in a row as it was unable to overcome a big drop earlier in the week sparked by a cautious outlook from Cisco Systems Inc.
The odds of the Federal Reserve increasing short-term US interest rates this summer for the first time since May 2000 lengthened after the job data. Stock investors like lower interest rates as they tend to spur consumer spending and boost corporate profits by keeping borrowing costs down.
The Labour Department also said the unemployment rate fell to 5.6 percent last month - the lowest in two years - from 5.7 percent in December.
The strong rise in the Dow was driven in part by Intel, up 96 cents, or 3.2 percent, at $30.88, and Caterpillar, up $2.18, or 2.9 percent, at $78.50.
On the downside, US health insurer Cigna Corp said it would cut about 9 percent of its work force after its membership ranks fell sharply in the fourth quarter. It posted a fourth-quarter net profit but said it would slash its quarterly dividend.
Cigna fell $5.55, or 8.9 percent, to $56.55.
The technology sector picked up momentum from the US-traded shares of Swedish telecoms equipment maker Ericsson after it reported surprisingly strong fourth-quarter profits and signalled a return to growth in 2004 with healthier margins.
Its ADRs jumped $3.07, or almost 13 percent, to $26.77.
Technology shares also got a boost from Maxim Integrated Products Inc, a supplier of analog microchips used in a variety of electronics.
Maxim reported a higher quarterly profit on Thursday and said it has accelerated its production schedule by about nine months in response to increasing demand.
Maxim rose $3.76, or 7.7 percent, to $52.48.