Stocks added to gains as the close neared, with the Dow rising above the 11,000 mark, as investors anticipated the weak jobs report would prompt the Federal Reserve to step in and spur economic growth.
The Dow Jones Industrial Average was up more than 70 points, pushing the blue-chip index above the psychologically significant 11,000-level for the first time since May 4 and putting in on track to close above 11,000 for the first time since May 3. The first time the Dow closed above 11,000 was eleven years earlier, on May 3, 1999.
The highest close for the Dow this year was on April 26, when the Dow reached 11,205.
Alcoa and Caterpillar were the blue-chip index leaders, while Bank of America and Kraft fell.
The S&P 500 and the Nasdaq were also higher. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell near 20.
Materials, consumer discretionary and energy sectors rose, while telecoms fell.
The dollar fell sharply against the euro and yen, while gold prices continued to rally above $1,345 an ounce.
Private employers added 64,000 workers last month, short of the 75,000 economists expected, according to government reports. Overall, 95,000 jobs were slashedand the unemployment rate held steady at 9.6 percent in September. Economists polled by Thomson Reuters were expecting it to rise to 9.7 percent.
Some traders believe a weak jobs report increases the possibility the Fed would pump more money into the financial system—known as quantitative easing—to help spur growth.
"The twisted irony is this should be perceived as a negative, but Wall Street is banking on heavy Fed involvement to help push stocks higher for the rest of the year," said Todd Schoenberger, managing director LandColt Trading. "The issue isn’t if the Fed is going to make a move, but how much."
Most market participants believe the Fed will buy $500 billion in assets, he added. That would lead to a 0.5 to 1.5 percent increase in GDP, ensuring GDP will hit the important threshold of 2.5 percent to maintain a level rate of employment.
In a Friday research note, Bank of America Merrill Lynch said the Fed is likely to announce a "flexible program," that would begin with an initial purchase of $500 billion over six months, but more buying could take place after that, if needed.
"The communication will be key," the research note stated. "The language should tie continued buying to the Fed's inflation objectives. We do not expect the Fed to explicitly announce an inflation target, but we do expect it to be clear that the Fed is committed to 1.5% - 2.0% core inflation."
One piece of bad news in the employment data was the rise in private payrolls was due to increases in just two areas: services and health care, said Doug Roberts, chief investment strategist at Channel Capital Research.com.
"If all job growth is coming out of that, it doesn’t speak well to a robust economy," Roberts said.
In earnings news, shares of Alcoa soared after the aluminum producer said its profit rose above expectations. The firm also issued an upbeat outlook, raising its forecast for global aluminum demand this year to 13 percent from 12 percent. In addition, UBS raised its price target on the company to $13.25 from $12.
Earnings season gets into full swing next week with companies including Intel , JPMorgan , Google and General Electric slated to report third-quarter results.
In the tech sector, Deutche Bank downgraded the semicap equipment sector to "sell," saying fundamentals of the business were weakening. The brokerage downgraded Varian Semiconductor to "hold" from "buy" and Lam Research, Novellus, and KLA-Tencor to "sell" from "hold." Deutche Bank also cut price targets for Varian and Applied Materials .
Micron shares jumped more than 6 percent after the chipmaker swung to a profit in the fourth quarter, but its earnings and revenue missed analysts' expectations due to tepid technology spending. However, at least three brokerages lowered their price targets on the firm.
Adobe shares sank after the New York Times reported Microsoft CEO Steven Ballmer was at the software firm's offices for a "secret meeting."
Netflix shares were lower after speculation an initial public offering for Hulu could raise $200 million to $300 million.
Amazon.com will open an applications store that runs on Google's mobile Android platform, the Wall Street Journal reported. Amazon's entry into the mobile-applications marketplace would open a new battlefield with Apple, the paper said.
Bank of America raised its price target for Apple to $400 a share from $360, while Oppenheimer raised its price target to $345 from $330, and said it would buy the stock ahead of fourth-quarter earnings.
Google shares rose after Goldman Sachs raised its price target on the search engine giant to $625 from $600.
Shares of Motorola, meanwhile, fell after Citigroup cut the telecom company to "hold" from "buy."