Wall Street gains on payrolls report, QE2 support

By Chuck Mikolajczak

April 1, 2011 12:35 PM EDT

U.S. stocks rose on Friday after solid data on the labor market bred confidence in the economic recovery and comments from a Federal Reserve Bank president signaled support for quantitative easing.

The combination of good news for the market pushed the S&P 500 through a key technical level it has been unable to sustain despite several attempts this month.

U.S. employment recorded a second straight month of solid gains in March and the jobless rate fell to a two-year low of 8.8 percent.

"We are growing, we are getting more profitable, we are going to see more jobs. That means consumers are going to do better. That is the better picture to look at," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco.

New York Federal Reserve Bank President William Dudley said in response to reporters' questions in San Juan, Puerto Rico, that it would be a "surprise" if the U.S. Federal Reserve did not complete its $600 billion in bond purchases, though the benefits of doing more have fallen.

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The S&P broke above 1,332, a significant level as it represents double the 12-year low hit in March 2009. If the index stays convincingly above that threshold, it may trigger more buying.

"1,333 is really the breakout -- we are making new highs for the bull market for several indices and you will see confirmation from the S&P shortly," said Pado.

The Dow Jones industrial average <.DJI> gained 94.68 points, or 0.77 percent, to 12,414.41. The Standard & Poor's 500 Index <.SPX> rose 11.27 points, or 0.85 percent, to 1,337.10. The Nasdaq Composite Index <.IXIC> advanced 19.86 points, or 0.71 percent, to 2,800.93.

The S&P 500 ended the first quarter on Thursday with a gain of 5.4 percent.

NYSE Euronext shares rallied after Nasdaq OMX Group Inc and IntercontinentalExchange Inc unveiled a bid to buy the rival exchanges operator, topping an earlier offer from Deutsche Boerse AG .

NYSE's stock surged 11.3 percent to $39.14 while ICE shares lost 4.1 percent to $118.52 and Nasdaq OMX rose 7.2 percent to $27.69.

In another snapshot of the economy, the U.S. manufacturing sector grew at a marginally slower pace in March after accelerating at its fastest rate in nearly seven years in February, according to the Institute for Supply Management. The data had little impact on stocks.

Construction spending fell more than expected in February, dropping to its lowest level since October 1999, the Commerce Department said.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)