Dow Jones Industrial Average, S&P 500 Set Record Highs On Unexpectedly Robust Nonfarm Payroll Report For April, Strong Corporate Earnings

A surprisingly strong April employment report and robust Q1 corporate earnings lifted shares of U.S. companies into record territory Friday, as both the blue-chip Dow Jones Industrial Average and the broader S&P 500 index of large corporation stocks closed at new highs.

The Dow Jones Industrial Average climbed 142.38, or nearly 1 percent, to close at 14,973.96, up from its previous closing high of 14,865.15 set on April 11 of this year. The S&P 500 rose 16.83, or slightly more than 1 percent, to close at 1,614.42, up from its previous closing high of 1,597.59 set on May 2.

The Nasdaq Composite gained 38.01, or 1.14 percent, to end the session at 3,378.63, far less than the 5,048.62 set on May 10, 2000.

Stocks rallied after the Bureau of Labor Statistics said U.S. employers created 165,000 jobs in April, more than most analysts expected, and the unemployment rate slipped modestly to 7.5 percent, a four-year low. However, while stronger than anticipated, job creation in the U.S. remains -- by historic standards -- paltry.

The government's latest gauge of the economy's ability to put Americans back to work indicated that, while the climate isn't robust, it continues to steadily improve, and it marks a sharp improvement to the March numbers. It also eases concerns that the federal government's budget cuts have not, at least so far, weakened the nation's job creation machine.

"There was a real sigh of relief to the fairly good jobs report," said Stuart G. Hoffman, chief economist for the Pittsburgh, Pa., PNC Financial Services Group. "It knocked down some fears about the economy. The temperatures have risen in the economy this spring. What's important is that this is a continuation of a good rally that we saw in the early part of the year."

Meanwhile, Q1 corporate earnings continue to impress investors. S&P Capital IQ said Friday that the earnings per share of the entire S&P 500 this quarter has climbed to a record $26.62, beating the previous record of $26.36, which was set in the last quarter of 2012. The group also said that, of the 405 companies that have reported Q1 earnings to date, 279 of those have beaten analysts' estimates, 92 have missed, and 34 have been met.

"This produces a 'beat' rate of 69 percent, higher than the 10-year average of 62 percent," S&P Capital IQ's Christine Short said.

Investor worries about the possibility of a downturn appear to be easing. The Chicago Board of Options Exchange Volatility Index, which has dropped 29 percent this year, fell 5.5 percent on Friday. The index gauges investor fears by how much protection they buy against possible losses in the stock market.

Hoffman said the market may be due for a correction but that after any such correction he would expect equities to continue climbing.