NEW YORK — An unexpectedly strong jobs report gave stocks a lift Friday, pushing the Dow Jones industrial average back to an all-time high.
The gains were led by banks, such as Bank of America and
JPMorgan Chase, which stand to benefit from a pickup in lending as the economy strengthens. Consumer-focused stocks such as Priceline.com and Disney also rose after reporting higher profits.
Losers included housing stocks and Twitter, which dropped 7 percent the day after its initial public offering.
Friday’s jobs report left investors grappling with how to interpret this week’s good economic news and what it means for the Federal Reserve’s stimulus program. That program has helped power this year’s stock rally.
“We’re walking a tight wire with the Fed,” said Rob Lutts, chief investment officer at Cabot Money Management. He said the jobs report was positive because it showed that the economy was improving, but perhaps not strongly enough to ensure that the Fed will pull back on its bond-buying program before the end of year.
The Dow gained 167.80 points, or 1.1 percent, to 15,761.78. It also closed at a record high Wednesday.
The Standard & Poor’s 500-stock index ended 23.46 higher, or 1.3 percent, at 1770.61, just a point below its record. The Nasdaq composite rose 61.90 points, or 1.6 percent, to 3919.23.
Both the Dow and S&P 500 recovered all of their losses from Thursday, when concern about the Fed withdrawing its stimulus outweighed optimism about faster economic growth.
Reaction to the jobs news was more pronounced in the Treasurys market. The yield on the 10-year note jumped to its highest level in six weeks as investors sold Treasurys, anticipating less demand if the Fed slows its purchases. The yield on the 10-year note jumped from 2.60 percent on Thursday to 2.75 percent Friday, the highest level since Sept. 20.
JPMorgan Chase rose $2.31, or 4.5 percent, to $53.96. Bank of America gained 52 cents, or 3.8 percent, to $14.32.
Housing stocks were among the biggest decliners Friday. Rising Treasury yields led to higher mortgage rates, and that can hurt demand for homes. Lennar fell $1.45, or 4.2 percent, to $32.79. PulteGroup dropped 66 cents, or 3.8 percent, to $16.85.
The government reported that U.S. employers added 204,000 jobs in October, an unexpected burst of hiring during a month in which the federal government was partially shut down for 16 days. The jobs report was the second piece of robust economic news that Wall Street received in the past two days. The Commerce Department said Thursday that the U.S. economy grew at an annual rate of 2.8 percent in the third quarter, better than the 2.5 percent that economists expected.
The Fed has been buying $85 billion worth of bonds each month since last December to keep long-term interest rates low and encourage hiring and borrowing. The program has also helped drive up stock prices by making bonds look expensive.
Some analysts say the Fed’s role in the stock market surge has been overstated, compared with factors such as rising corporate earnings. Removing the stimulus would probably benefit the economy by eliminating one of the uncertainties facing U.S. businesses, said Liz Ann Sonders, chief investment strategist at Charles Schwab.
“It’s time we rip the Band-Aid off,” Sonders said. “If it’s the data that supports it, all the better.”
Among other stocks making big moves:
●Gap rose $3.68, or 9.8 percent, to $41.43 after the retailer reported solid sales gains for October and gave an upbeat profit forecast for its third quarter.
●Priceline rose $50.31, or 4.9 percent, to $1,073.20. The online booking company said its profit rose 40 percent in the third quarter, helped by increased bookings for flights, rental cars and hotels.
●Walt Disney rose $1.43, or 2.1 percent, to $68.58 after the company’s earnings rose 12 percent in its fiscal fourth quarter, beating analysts’ expectations.
●Twitter fell $3.25, or 7.2 percent, to $41.65 on the social media company’s second day of trading. The stock surged 73 percent above its IPO price Thursday.