Futures Add to Gains on Upbeat Jobs Report

Stock index futures added to gains on Friday after the government said nonfarm payrolls rose more than expected, and the unemployment rate fell, providing a strong signal that the U.S. economic recovery is on track.

Nonfarm payrolls rose by 216,000 in March, driven higher by a 230,000 gain in private-sector employment, the Labor Department said. The unemployment rate fell to 8.8 percent in March, the lowest level since March 2009, from 8.9 percent in February.

Economists surveyed by Reuters had expected payrolls to rise by 190,000 after rising a revised 194,000 in February.The government had reported earlier that February payrolls rose 192,000.

The number is in line with continuing drops in jobless claims, and a strong private sector payrolls report from ADP on Wednesdsay.

With a strong report, market participants will likely fuel talk over when the Federal Reserve will exit its monetary stimulus and when it might raise interest rates.

"Here's the conundrum for traders: As terrific as today's number is, it could also be a reason to worry the Fed will seriously consider an early withdrawal of QE2 and begin talk of higher rates to 'slow the recovery,'" said Todd Schoenberger, managing director of LandColt Trading. "If this happens, then investors will have to refocus their attention to quarterly earnings, which could turn out to be a mixed bag and, therefore, result in a very volatile April for equities."

A global economic recovery is taking shape, but economist Nouriel Roubini told CNBC he sees a number of uncertainties that could hurt economic growth.

“I don’t expect them to raise rates until sometime next year...in my view the Fed is going to be more slow and more gradual than the ECB (in terms of policy tightening),” Roubini said.

The jobs report will overshadow other economic data due on Friday and is likely to drive stocks. The March ISM manufacturing index and February construction spending, were both due at 10 a.m.

Auto sales also will be released on Friday, and are expected to rise about 12 percent from last year's depressed levels. High gasoline prices and production problems caused by the Japanese earthquake could slow a recovery, Reuters said, citing analysts.

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In deal news, Nasdaq OMX and IntercontinentalExchangeput forth a rival bidto buy NYSE Euronext for about $11.3 billion in cash and stock.

The offer is valued at $42.50 per share, a premium of 19 percent to the price proposed by Deutsche Boerse. ICE shares slipped 2.8 percent and NYSE Euronext jumped 11.4 percent.

JPMorgan downgraded the consumer discretionary sector to "neutral" from "overweight," saying this "short-term" downgrade reflects the fact the sector has been "structurally weaker" for awhile. According to JPMorgan, economic momentum is slowing and the sector as a whole as high valuations.

In other news, David Sokol’s surprise resignationas one of Bershire Hathaway’s top executives continues to raise questions. His Lubrizol stock purchases before Warren Buffett company announced a proposed takeover of the chemicals company have come under scrutiny.

Oil prices continued to surgeon Friday as the rebels lost ground in Libya. U.S. light sweet crude climbed above $107 a barrel, after gaining 16 percent in the first quarter, while London Brent crude rose to nearly $118, after gaining nearly 24 percent in the first quarter.

European shares firmed on the first trading day of the second quarter. After their relative weakness on Thursday, banks were stronger Friday. Irish banks in particular saw sharp moves after the Irish central bank revealed the results of new bank stress tests after the market close Thursday.

Portugal was in focus once against after its sold 1.65 billion euros in an extraordinary bond auction.Yields rose, but less than expected. Separately, the country has announced it will hold a general election on June 5.

The crisis in Japan continues. A Japanese newspaper reported Friday that Japan will take control of Tokyo Electric Power, the operator of a stricken nuclear plant, in the face of mounting public concerns over the crisis and a huge potential compensation bill, Reuters said.

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