U.S. stocks closed sharply higher Friday, with the S&P and the Nasdaq posting their strongest close ever, after a stronger-than-expected jobs report.
"The jobs report was incredibly impressive," said JJ Kinahan, chief strategist at TD Ameritrade. "What I think it did, is it took the May report and made it into an anomaly."
The Dow Jones industrial average rose 190 points and posted a gain for the week. Merck contributed the most gains on the Dow, followed by Goldman Sachs.
"After three weeks of stocks not doing much, ... this is the catalyst for stocks to continue higher," said Kate Warne, investment strategist at Edward Jones. "I think it puts to bed fears of a faltering economy."
The S&P 500 advanced about 0.8 percent, with financials rising nearly 2 percent. The benchmark index broke above its previous all-time intraday high of 2,178.29 in mid-morning trade. The Nasdaq gained approximately 1 percent.
"The big takeaway, for me, is the market is doing exactly what it needs to move higher," said Adam Sarhan, CEO of Sarhan Capital. "We're now getting confirmation about what the Fed has been telling; that the economy is going to pick up in the second half."
The U.S. economy added 255,000 jobs in July, well above the expected 180,000. The unemployment rate remained unchanged at 4.9 percent.
"It was a pretty good number," said Lindsey Piegza, chief economist at Stifel Fixed Income. "This is another data point that supports the thesis that the labor market is improving" after a sluggish first half.
"It's the second consecutive month where economists have been surprised," said Andrew Chamberlain, chief economist at Glassdoor, noting the labor market has now seen expansion for 85 months, the largest expansion since the 1990s.
However, Mike Wachholz, president of Pontoon, said "I think we've reached terminal velocity," adding he finds it difficult for the labor market to keep up this pace since businesses are under pressure to make the right hiring decisions, and "they know they have limited bullets in the chamber."
Investors kept a close eye on the report, as it may prompt the Federal Reserve to tighten monetary policy sooner rather than later. That said, Stifel's Piegza said the report "does seem to be a bit at odds with other data points," particularly the most-recent U.S. GDP growth number.
Market expectations for a September rate hike are just 18 percent, according to the CME Group's FedWatch tool.
"I think the Fed is in a conundrum," said James Marple, senior economist at TD Bank Group. He said the central bank will be watching to see if the economy moves higher, in the direction of jobs growth, or lower along side business investments.
Meanwhile, the oil markets took a breather after two straight days of solid gains, with U.S. crude settling 0.31 percent lower at $41.80 a barrel. Weekly rig count data from Baker Hughes showed the U.S. added seven rigs.
U.S. Treasurys erased slight gains after the jobs report release, with with two-year note yield holding near 0.71 percent and the benchmark 10-year yield around 1.58 percent.
"The risk is to the upside in yields," said Kathy Jones, chief fixed income strategist at Charles Schwab. "I'm actually surprised the short end of the curve didn't move higher."
The dollar rose against a basket of currencies, with the euro near $1.108 and the around 101.8.
Earnings season began winding down Friday, with Allianz and Novo Nordisk, among others posting results before the bell. Next week, a slew of retail firms will be reporting quarterly results, including Nordstrom and Macy's.
"Retail gives you the best indicator of how the consumer is doing," said Howard Silverblatt, senior index analyst at S&P Dow Jones. He also noted that, while the market is near all-time highs "we have not moved much. We're settling on a trading range, but it's at the higher end.
Overseas, European markets rose broadly, with the Stoxx 600 index advancing about 1 percent. Asian markets were mixed, with the Nikkei 225 closing flat and the Shanghai composite slipping 0.19 percent.
Major U.S. Indexes
The Dow Jones industrial average closed 191.48 points higher, or 1.04 percent, at 18,543.53, with Merck leading advancers and Verizon the top decliner.
The rose 18.62 points, or 0.86 percent, to close at 2,182.87, with financials leading eight sectors higher and utilities and telecommunications lagging.
The Nasdaq rose 54.87 points, or 1.06 percent, to 5,221.12.
About three stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 848.87 million and a composite volume of 3.555 billion at the close.
The CBOE Volatility index (VIX), widely considered the best gauge of fear in the market, traded lower, near 11.3.
Gold futures for December delivery settled $23 lower at $1,344.40 per ounce.
Correction: This story has been updated to reflect that Glassdoor's Andrew Chamberlain said this is the largest labor-market expansion since the 1990s.
On tap this week:
*Planner subject to change.
Friday
1 p.m.Rig count
3 p.m. Consumer credit