NEW YORK (AP) - U.S. stocks jumped Friday on news that the unemployment rate dropped to the lowest level in three years.
Before the market opened, the Labor Department said companies hired 243,000 employees in January. That's the strongest job growth in nine months. The increase in hiring pushed the unemployment rate down to 8.3 percent.
The surprising data gave stocks a jolt. The Dow Jones industrial average shot up 161 points in early trading before drifting lower. "In this economy only one variable matters right now and that variable is employment," said Lawrence Creatura, an equity portfolio manager at Federated Investors.
"This report was great news. It was beyond all expectations, literally. The number was higher than even the highest forecast."
The Standard & Poor's 500 index added 16 points to 1,342, shortly after noon Eastern time. That's a gain of 1.2 percent. The S&P 500 is on track to rise for the fifth straight week, the longest weekly winning streak since January of 2011. It's up 6.7 percent so far this year.
More evidence that the economy is gaining strength followed the jobs report. A trade group said the service industry expanded at the fastest pace since last February. The government also said factory orders rose 1.1 percent in December, supported by a rebound in orders for heavy machinery.
In other trading, the Dow Jones industrial average jumped 148 points to 12,847, a rise of 1.1 percent. Bank of America Corp. led the Dow, rising 4.2 percent. Only two stocks, Merck and Procter & Gamble, were lower.
The Nasdaq composite added 42 points, or 1.5 percent, to 2,901.
Treasury prices fell lifting the yield on the 10-year Treasury to 1.93 percent. When bond prices fall, yields rise. The benchmark 10-year rate had traded below 1.79 percent earlier this week as traders bought U.S. Treasurys on renewed concern over Europe's ongoing debt crisis.
The U.S. jobs figures helped markets in Europe rally on Friday despite further evidence that the 17-country eurozone is heading for recession. Germany's DAX rose 1.7 percent and France's CAC-40 gained 1.5 percent.
Among companies whose stocks are making large moves:
- Genworth Financial soared 14 percent, the best gain in the S&P 500. The insurance company reported late Thursday that it swung to a profit in the most recent quarter, helped by gains in sales of life insurance.
- Weyerhaeuser gained 3.3 percent after reporting better quarterly earnings than analysts' forecasts. The timber and real estate company's earnings still sank 62 percent.
- Video game maker Take-Two Interactive Software Inc. jumped 4 percent. The company reported a 65 percent drop in quarterly profits after the market closed Thursday, but Wall Street's analysts expected much worse.
(Copyright 2012 by The Associated Press. All Rights Reserved.)