Stocks rose Friday as Wall Street enthusiastically greeted the government's payroll report, which showed that the U.S. economy added twice the number of jobs than had been expected last month, offering investors a positive sign of growth.

S&P component Sears, Roebuck & Co. (S) jumped more than 25 percent to $46.90 after real estate company Vornado Realty Trust (VNO) said it raised its stake in the retailer, a step that could lead Sears to convert some of its real estate assets into cash.

The Dow Jones industrial average (search) rose 72.78 points, or 0.71 percent, to close at 10,387.54. The Standard & Poor's 500 Index (search) was up 4.50 points, or 0.39 percent, to end at 1,166.17. The technology-laced Nasdaq Composite Index (search) was up 15.31 points, or 0.76 percent, to finish at 2,038.94.

For the week, the Dow gained 3.6 percent, while the Nasdaq and the S&P 500 each gained about 3.2 percent.

The Dow and Nasdaq closed at their highest since June 30. The S&P, which was at its high since March 2002 for the second session in a row, has risen for nine consecutive sessions.

No fewer than 337,000 new jobs were created in October, the Labor Department (search) reported. The number was nearly double what Wall Street expected, and the euphoria over the increased hiring fueled the stock market's recent rally. The strength of the figures, which included upward revisions of the August and September figures as well, allowed investors to overlook an unexpected jump in the unemployment rate to 5.5 percent, up from 5.4 percent in September.

However, some investors feared that the increase in wages flowing into the economy could trigger inflation. That prompted a selloff on the bond market, with the yield on 10-year notes reaching 4.18 percent. Investors grew increasingly certain that the Federal Reserve (search) would raise interest rates in both its November and December meetings to combat the inflationary pressure.

"You absolutely have to have Fed action both months now," said Doug Sandler, chief equity strategist at Wachovia Securities. "The saving grace for the economy this year has been no inflation, and a big component of that is wages. When there are more wages, inflation becomes a factor. We haven't seen it yet, but it becomes a concern that the Fed will have to face."

Since Oct. 25, the Dow has been up in eight of the last nine sessions, while the S&P 500 and Nasdaq enjoyed nine straight gains, buoyed by lower oil prices, President Bush's election victory and the jobs report. For the week, the Dow gained 3.59 percent — it's best week since March 25, 2003 — while the S&P rose 3.18 percent and the Nasdaq climbed 3.24 percent.

The monthly payroll report is considered to be a key barometer of economic growth, and had been lagging for months as the economy's summer "soft patch" lingered into the third quarter. Now, with payrolls on the rise and the uncertainty of the presidential elections over, investors who had been staying out of the market appeared to be clamoring to get back in.

Some analysts downplayed the question of inflation.

"I don't want to say it's clear sailing to the end of the year, but the seas look pretty calm," said Robert MacIntosh, chief economist for Eaton Vance Corp. "For now, we're not seeing wages become an inflationary issue, and the Fed should be able to manage that."

Investors were further pleased by crude oil futures, which — for now — appear to have stabilized below $50 per barrel. A barrel of light crude for December delivery was quoted at $49.61, up 79 cents, on the New York Mercantile Exchange (search).

Analysts said relatively lower crude prices may be helping industrial conglomerate 3M Co. (MMM), which rose 4.3 percent, or $3.32 to $81.40 and was the biggest boost to the Dow.

Dmitry Silversteyn, an analyst with Longbow Research, noted higher oil prices can act like an invisible consumer tax and 3M has many consumer-oriented products.

"With oil prices going down, that concern is diminishing," he said.

Even the technology sector, which had risen at a much slower rate during this rally, saw good news from semiconductor maker nVidia Corp. (NVDA). The maker of graphics chipsets saw its profits quadruple in the third quarter as the company enjoyed brisk sales of its latest desktop computer chips. which surpassed Wall Street profit expectations by 6 cents per share, surged $2.23, or 14.5 percent, to $17.64.

Among other stocks, Pixar Animation Studios Inc. (PIXR) reached an all-time high on expectations that its latest animated film, "The Incredibles," will be a box-office hit. Pixar shares rose $3.59, or 4.4 percent, to $84.45.

Goodyear Tire & Rubber Co. (GT) forecast a quarterly profit and sales that exceeded most analysts' estimates. Goodyear shares rose $1.57, or 15.4 percent, to $11.80.

Shares of Cisco Systems Inc. (CSCO) gained 45 cents, or 2.3 percent, to $19.97, lifting the Nasdaq and the S&P 500. Cisco, the largest maker of gear for directing Internet traffic, is scheduled to release its first quarter fiscal year results on Tuesday.

Credit card issuer MBNA Corp. (KRB) rose 62 cents to $27.49 as it began distributing its new American Express-branded credit cards, the result of a legal battle that American Express Co. won over Visa USA Inc. and MasterCard International Inc. American Express was up 17 cents at $55.12.

Spanish-language television network Univision (UVN) tumbled $4.01, or 12.2 percent, to $28.79 despite posting third-quarter results that beat analysts' estimates by a penny per share. The company credited increased viewership and advertising sales for its gains, but investors were disappointed with the company's lowered fourth-quarter outlook.

Merck & Co. (MRK) was in the spotlight after the New York Times reported the giant drug company is to become the target of hundreds of plaintiffs' lawyers relating to its blockbuster painkiller Vioxx, which was pulled from shelves in September.

The Russell 2000 index of smaller companies was up 2.16, or 0.36 percent, at 604.29.

Overseas markets fed off of Wall Street's ongoing rally, as Japan's Nikkei stock average rose 1.06 percent for the session. In Europe, Britain's FTSE 100 closed up 0.24 percent, France's CAC-40 gained 0.49 percent, and Germany's DAX index climbed 0.55 percent in late trading.

Reuters and the Associated Press contributed to this report.