Friday's Closing Update: Stocks Extend Best Start Since 1989

Stocks rallied strongly on Friday after the government said U.S. employers added 243,000 jobs during January, blowing past forecasts and sending traders into equities as confidence grows that the American economy continues to mend.

The S&P 500 was ahead 1.25% just before the close, extending its weekly gains to a fifth week and making for its best year start since 1989. Other major indices higher.

Coupled with the positive jobs growth, the nation's unemployment rate also fell to 8.3%, its lowest level in nearly three years. The Labor Department also revised December's gain to 203,000 new jobs.

Both the drop in the unemployment rate -- down 0.8% since August -- and the increase in January hiring surprised experts polled by Thomson Reuters and Bloomberg. Economists in the Bloomberg survey had forecast a 140,000 increase in jobs last month; the Reuters survey had it pegged at 150,000. Both surveys had the jobless rate holding steadying at 8.5%.

A separate survey released Friday showed service jobs expanded during January at a faster pace than expected. The Institute for Supply Management's monthly non-manufacturing purchasing managers' index came in 56.8 last month, up from a revised 53.0 reading in December. Forecasters surveyed by Dow Jones Newswires had predicted the January PMI to rise to 53.1. Readings above 50 indicate expanding activity.

All 10 sectors in the S&P 500 finished higher Friday, led by financials and industrial stocks, along with consumer discretionary companies gaining strength throughout the session to nearly catch the leaders at the close. Energy stocks also posted big gains.

Commodities were mixed. Gold fell as the U.S. dollar rose against other currencies with the March gold contract sliding $11.90 to $1,724.60 an ounce. Crude oil settled near $97.70 a barrel, up 1.34. Natural gas was down about 5 cents near the close at $2.50 per 1 million British Thermal Units.

Here's where markets stood at end-of-day, Friday:

Dow Jones Industrial Average up 156.82 (+1.23%) to 12,862.23

S&P 500 up 19.36 (+1.46%) to 1,344.90

NASDAQ Composite up 45.98 (+1.61%) to 2,905.66

UPSIDE MOVERS

(+) THLD, (+79.7%) Signs global agreement with Merck KGaA to develop hypoxia-targeted drug.

(+) ZOLT, (+38.2%) Strong Q1 Financial Results; possibly short-covering rally.

DOWNSIDE MOVERS

(-) EW, (-17.5%) Guides Q1 results below Wall Street expectations.

(-) MNKD, (-12.0%) Selling 31.25 million equity units; $75 million in gross proceeds.