Stocks finished sharply Friday after the U.S. added 2.5 million jobs to payrolls in May, an increase that caught investors and Wall Street economists off guard.
The Bureau of Labor Statistics said 2.509 million jobs were created last month, compared with economists' forecasts that called for job losses of 9 million. The unemployment rate tumbled 1.4 percentage points to 13.3%, better than estimates of 19%.
“(Friday's) jobs report is much-needed good news for the American labor force. It shows that hiring is picking up steam at a rapid rate. But it would be a dangerous mistake to think we are out of the woods," said Josh Lipsky, director of programs and policy at the Atlantic Council's Global Business & Economics Program.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, called the report the "biggest payroll surprise in history."
The Dow Jones Industrial Average finished up 829 points, or 3.15%, to 27,110, the S&P 500 jumped 2.62% and the Nasdaq Composite was up 2.06%.
The Nasdaq hit an intraday high of 9,845, surpassing the earlier record of 9,838 on Feb. 19.
U.S. stocks also got a lift from a report that said the Trump administration expects to spend up to $1 trillion in the next round of economic stimulus.
Action on any measure likely would come near the end of July, Bloomberg reported, citing people familiar with the matter.
European shares, meanwhile, rose after the European Central Bank boosted its coronavirus bond buying program by a larger-than-expected €600 billion ($677 billion) for a total of €1.35 trillion ($1.52 trillion).
“The fear from the outset of this crisis was that the initial response would give way to stimulus fatigue precisely at the moment the American worker needed help the most," Lipsky said.
"To avoid backsliding into job loss we need to see new stimulus that provides relief through 2020 and invests in the rebuilding of the country through 2021 and beyond.”
Oil prices rose Friday, taking crude to its sixth consecutive weekly gain. Investors reacted to news that OPEC members, as well as Russia, have agreed to hold a virtual meeting Saturday that could see an agreement on deeper and longer production cuts now that the global economy is starting to show signs that demand is recovering.
West Texas Intermediate crude oil, the U.S. benchmark, rose 4.22% to $38.99 a barrel.