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US STOCKS-Strong jobs report sets off broad-based rally on Wall Street

Sruthi Shankar and Shreyashi Sanyal

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* U.S. April job additions rise solidly above estimates

* All major S&P sectors trading higher

* Amazon.com up as Berkshire Hathaway buys shares

* Activision Blizzard falls on weak Q2 profit forecast

* Indexes up: Dow 0.72%, S&P 0.88%, Nasdaq 1.29% (Updates to early afternoon)

May 3 (Reuters) - Wall Street's main indexes rose in a broad-based rally on Friday, as job growth surged in April and unemployment rate dropped, pointing to solid expansion in the domestic economy.

The Labor Department said employers added 263,000 jobs in April, which blew past expectations, and the unemployment rate dropped to a more than 49-year low of 3.6%. However, average hourly earnings came in just shy of expectations, indicating muted inflationary pressure.

"The labor market appears to be very strong and there is no inflation. It's a great number for risk assets," said John Brady, managing director at R.J. O'Brien & Associates in Chicago.

"In terms of Fed policymakers, they don't have to do much at all."

Falling unemployment is expected to put an upward pressure on inflation and supported the Federal Reserve's decision to be patient with interest rate hikes.

However, St. Louis Fed chief James Bullard, who voted with the rest of the Fed's policymakers on Wednesday to keep rates on hold, said the central bank may need to cut rates if inflation remains sluggish beyond the second quarter.

Boosting the S&P 500 and the Nasdaq, Amazon.com Inc rose 3.2%, after CNBC reported Warren Buffett's Berkshire Hathaway Inc has bought shares of internet retailing giant for the first time.

The consumer discretionary sector rose 1.43%, leading a rally among the 11 major S&P sectors.

At 13:09 p.m. ET the Dow Jones Industrial Average was up 188.79 points, or 0.72%, at 26,496.58. The S&P 500 was up 25.68 points, or 0.88%, at 2,943.20 and the Nasdaq Composite was up 103.99 points, or 1.29%, at 8,140.76.

With nearly 400 S&P 500 companies that have reported so far, three-quarters have topped profit estimates, according to Refinitiv data.

The upbeat reports have turned around earnings estimate for the first quarter to an almost 1% rise compared with a 2% decline at the start of April.

Newell Brand Inc shares jumped 11.4% after the consumer goods maker exceeded Wall Street expectations for quarterly adjusted profit as it benefited from cost savings and higher pricing.

Network gear-maker Arista Networks Inc tumbled 13.8%, the most among S&P 500 companies, after it forecast weak current-quarter revenue.

Activision Blizzard Inc fell 4.2% after the videogame maker forecast current-quarter profit below expectations as it puts more money into its franchises to battle competition.

Advancing issues outnumbered decliners by a 3.77-to-1 ratio on the NYSE and a 3.19-to-1 ratio on the Nasdaq.

The S&P index recorded 30 new 52-week highs and two new lows, while the Nasdaq recorded 73 new highs and 26 new lows. (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur)