A drop in the unemployment rate to its lowest in three years propelled the Dow Jones industrial average Friday to its highest close since before the 2008 financial crisis. The Nasdaq composite index hit an 11-year high.
The Dow jumped 156.82 points to 12,862.23, its highest mark since May 19, 2008, about four months before Lehman Brothers investment bank collapsed.
Before the market opened, the Labor Department said the economy added 243,000 jobs in January. It was the strongest job growth in nine months. The increase in hiring pushed the unemployment rate down to 8.3 percent, the lowest since February 2009.
The surprising data gave financial markets a morning jolt that lasted throughout the trading day. The Nasdaq index closed 45.98 points higher at 2,905.66, its highest since December 2000, during the steep decline that followed the dot-com stock bubble.
The price of ultra-safe Treasury notes dropped, sending yields higher, and the price of oil rose for the first time in a week.
"In this economy, only one variable matters right now, and that variable is employment," said Lawrence Creatura, an equity portfolio manager at Federated Investors. "This report was great news. It was beyond all expectations, literally. The number was higher than even the highest forecast."
The Standard & Poor's 500 index added 19.36 points, or 1.3 percent, to 1,344.90, its highest close since last July. The S&P 500 surged 2.2 percent for the week, its fifth straight week of gains. That's the longest weekly winning stretch since January of 2011.
More evidence that the economy is gaining strength followed the jobs report. A trade group said the service industry expanded at the fastest pace since last February. The government also said factory orders rose 1.1 percent in December, supported by a rebound in orders for heavy machinery.
Treasury prices fell, lifting the yield on the 10-year note Treasury to 1.93 percent. When bond prices fall, yields rise. The benchmark 10-year rate had traded below 1.79 percent earlier this week as traders bought U.S. Treasurys on renewed concern over Europe's ongoing debt crisis.
The U.S. jobs figures helped markets in Europe rally on Friday despite further evidence that the 17-country eurozone is heading for recession. Germany's DAX closed 1.7 percent higher, and France's CAC-40 gained 1.5 percent.
Among companies whose stocks made large moves:
— Genworth Financial soared 14 percent, the best gain in the S&P 500. The insurance company reported late Thursday that it swung to a profit in the most recent quarter, helped by gains in sales of life insurance.
— Weyerhaeuser gained 5.7 percent after reporting better quarterly earnings than analysts' forecasts. The timber and real estate company's earnings still sank 62 percent.
— Video game maker Take-Two Interactive Software Inc. rose 3 percent. The company reported a 65 percent drop in quarterly profits after the market closed Thursday, but Wall Street's analysts expected much worse.