Stocks Run to New Records

Meanwhile, job growth for the prior two months was revised downward. The government now says 10,000 fewer employees were put to work in March and April than had been first thought.

"On the positive side, the economy continues to show it can add jobs," said Michael Sheldon, chief market strategist with Spencer Clarke LLC. "There were some negatives, in that the economy continues to lose manufacturing and retail jobs. Temporary employment declined for the fourth straight month.

"However, this was generally a reassuring report, and it's unlikely this report will bring the Federal Reserve in off the sidelines to take any sort of action," he added.

Traders also welcomed more positive inflationary data, after the Commerce Department said that personal income eased 0.1% in April, compared with estimates of a 0.3% increase. Personal spending was up 0.5%, slightly above expectations.

Excluding food and energy, the personal consumption expenditure price index is now higher by 2% over the past year, down from 2.1% in March. The number is now within the Fed's comfort zone range of 1% to 2%.

"When you consider the Fed minutes from earlier this week, it looks like they are likely to remain on hold for some time," said Sheldon. "The key factors that will lead the Fed to cut rates will be accelerated weakness in the housing market, a rise in the unemployment rate, as well as a decline in income."