| NEW YORK
NEW YORK The Dow shot up more than 200 points, scoring its best day since January 2, and the S&P 500 ended a two-week losing streak on Friday after U.S. jobs data eased investors' worries that the Federal Reserve may be reducing its stimulus program in the near future.
The S&P 500 and the Nasdaq posted their best daily percentage gains since April 16.
All three major U.S. stock indexes rose more than 1 percent for the day, extending gains toward the session's end, with the S&P consumer discretionary index .SPLRCD and other growth sectors leading the way higher. The consumer discretionary index rose 1.8 percent. The S&P industrials index .SPLRCI also advanced 1.8 percent.
Microsoft (MSFT.O), up 2 percent at $35.67, was among stocks giving the biggest lift to both the S&P 500 and the Nasdaq.
Stocks have rallied for most of the year. But the market began to lose ground following Fed Chairman Ben Bernanke's comments on May 22 that the central bank may decide to ease back on its bond-buying programs in the next few policy meetings if data shows the economy is showing improvement. Last Friday, the S&P 500 marked two consecutive weeks of losses for the first time this year.
"The market earlier this week traded off precipitously, believing the Fed was close to stopping. Today's numbers make it pretty clear the Fed can't stop or even start tapering in September like they'd like to, so ironically the stock market is up," said Brian Amidei, managing director of HighTower Advisors in Palm Desert, California.
The Labor Department's data showed job gains of 175,000 in May, slightly above the economists' forecast, while the U.S. unemployment rate increased to 7.6 percent last month from 7.5 percent in April.
The Dow Jones industrial average .DJI surged 207.50 points, or 1.38 percent, to close at 15,248.12. The Standard & Poor's 500 Index .SPX advanced 20.82 points, or 1.28 percent, to 1,643.38. The Nasdaq Composite Index .IXIC climbed 45.16 points, or 1.32 percent, to end at 3,469.22.
For the week, the Dow gained 0.9 percent, the S&P 500 rose 0.8 percent, and the Nasdaq added 0.4 percent.
The U.S. job market has remained one of the economy's weakest areas since the recent downturn. The Fed, in turn, has linked its monetary policy to improvement in the country's job market. Economists say job gains of at least 200,000 per month over several months are needed to significantly reduce high unemployment.
The market's recent volatility suggests investors are starting to price in the eventual end of Fed stimulus, analysts said, raising concerns about how well stocks will fare without it.
The stock market's rally this year has largely been driven by the Fed's continued bond purchases.
The Dow is up 16.4 percent for 2013, while the S&P 500 is up 15.2 percent and the Nasdaq is up 14.9 percent.
"I think the rally is running out of steam," Amidei said, noting that investors have already begun to sell stocks to lock in profits in some industries and sectors.
High dividend-yielding shares, which led this year's rally, have been among the weakest performers over the last two weeks.
On Friday, Wal-Mart Stores Inc (WMT.N) shares rose 0.9 percent to $76.33 and helped lift the Dow after the world's largest retailer said its board had approved a new $15 billion stock-repurchase program, the first in two years.
Shares of video recorder pioneer TiVo Inc (TIVO.O) lost 19 percent to $11.10. Tivo said it would receive $490 million after settling a patent lawsuit with Google Inc's (GOOG.O) Motorola Mobility, Cisco Systems Inc (CSCO.O) and Time Warner Cable Inc TWC.N just days before the case was to go to trial.
Volume was roughly 6.4 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, in line with the average daily closing volume of about 6.4 billion this year.
Advancers outpaced decliners on the NYSE by a ratio of about 7 to 3. On the Nasdaq, nearly two stocks rose for every one that fell.
(Additional reporting by Chuck Mikolajczak; Editing by Jan Paschal)