Stocks surged Friday after record earnings from Alcoa, falling crude prices and reassuring June employment data inspired investors to buy equities.

All three major indexes rose more than 1 percent, and the Nasdaq touched its highest level since January.

Based on the latest available data, the blue-chip Dow Jones industrial average (search) gained 146.54 points, or 1.42 percent, to end at 10,448.83. The broad Standard & Poor's 500 Index (search) jumped 13.99 points, or 1.17 percent, to finish at 1,211.86. The tech-laced Nasdaq Composite Index (search) climbed 37.22 points, or 1.79 percent, to close at 2,112.88.

For the week, the Dow was up 1.41 percent, while the S&P 500 advanced 1.46 percent, and the Nasdaq gained 2.70 percent.

A day after London bomb attacks killed more than 50 people, the global financial community appeared confident that economic growth would be little affected. London's FTSE 100 surged 1.43 percent, nearly making up all of Thursday's losses. Other European markets likewise recovered, with Germany's DAX index rising 1.5 percent, and France's CAC-40 gaining 1.89 percent. Japan's Nikkei stock average fell 0.21 percent for the session.

"The long-awaited terrorist attacks have occurred, and the world remains intact," said Milton Ezrati, senior economic strategist at Lord Abbett & Co., of Jersey City, New Jersey. "This has been a cloud over the market for years and will remain one. But for the time being, there's a sense of relief that the civilized world has weathered this."

Investors welcomed the Labor Department's (search) job creation report. While the 146,000 jobs created in June were less than the 195,000 jobs economists had hoped for, the unemployment rate fell to 5 percent from 5.1 percent in May, and hourly earnings rose 0.2 percent. The Labor Department also revised higher job growth in April and May.

"From our standpoint, it's exactly the sort of jobs market we've been talking about for two years," said John Caldwell, chief investment strategist at McDonald Financial Group, part of Key Corp. "Some months are good, some are bad, but average them together, and we're OK."

Shares of blue-chip Alcoa (AA) helped drive the Dow's rally, up 4.3 percent a day after the leading aluminum maker reported better-than-expected earnings. International Business Machines Corp. (IBM) and General Electric Co. (GE) climbed after favorable research notes inspired some buying.

While Alcoa shares surged on the earnings report, the stocks of IBM and GE rallied on research, pushing up the blue-chip Dow and the broader S&P 500.

Morgan Stanley said GE's current stock price was a buying opportunity, while Merrill Lynch noted the world's largest computer company's results are due out in mid-July and "even a mediocre result could support the stock."

Alcoa rose $1.11 to $27.20 on the New York Stock Exchange. Shares of GE increased 2.4 percent, or 81 cents, to $34.99 and IBM's stock rose 2.5 percent, or $1.92, to $79.30. Both trade on the NYSE

"The Alcoa earnings were good and Alcoa is always a bellwether for basic industrial earnings," said Jim Awad, chairman of Awad Asset Management, of New York, who added that Alcoa's results suggested that investors will get more good news as the earnings season kicks off in earnest next week.

Oil prices dropped sharply in afternoon trading, falling below $60. U.S. crude for August delivery settled down $1.10 at $59.63 a barrel on NYMEX. That was down from a session high of $61.90, a peak reached on fears that Hurricane Dennis would damage oil rigs in the Gulf of Mexico.

"If Dennis doesn't hit the refineries or the oil platforms, you'll probably get a decent break in oil the first part of next week, and probably get an extension of the rally," said Jeffrey Saut, chief investment strategist at Raymond James Financial, of St. Petersburg, Florida.

Intel Corp. (INTC) advanced 2.7 percent, or 72 cents, to $27.28, and Microsoft Corp. (MSFT) rose 1.8 percent, or 44 cents, to $25.09.

Technology consulting firm Accenture Ltd. (ACN) climbed $2.01 to $24.21 after it reported a strong rise in second-quarter profits. The company surpassed analysts' expectations by 8 cents per share.

Siebel Systems Inc. (SEBL), the business software maker, said revenues for the second quarter would be lower than expected due to sluggish sales. Siebel fell 20 cents to $8.59.

The bond market dropped sharply as stocks rose. The yield on the 10-year Treasury rose to 4.11 percent from 4.06 percent late Thursday. The dollar made gains against other major currencies, while gold prices fell after climbing Thursday in the wake of the terror attacks.

Trading was active, with 1.47 billion shares changing hands on the New York Stock Exchange, a hair above the 1.46 billion daily average for last year. About 1.69 billion shares traded on Nasdaq, below the 1.81 billion daily average last year.

The number of shares gaining in value exceeded the number declining by a ratio of more than 3 to 1 on the NYSE and by about 11 to 4 on Nasdaq.

The Russell 2000 index of smaller companies was up 12.84, or 1.98 percent, at 662.14.

Reuters and the Associated Press contributed to this report.