US, European markets soar on US jobs report

European and US stock markets soared Friday, with the Dow, S&P 500 and Germany's Dax setting new records, as strong US jobs data for April revived confidence in the US economic recovery.

At the end of a cautious week, tempered by bearish economic views from the Federal Reserve and the European Central Bank, market bulls unleashed their energy finally after the US report painted a much brighter picture of the economy than was felt in recent weeks.

The Department of Labor reported an addition of 165,000 jobs for April, which exceeded analyst expectations. But it also made large upward revisions for the prior two months that showed 114,000 more jobs were added than initially estimated.

US stocks soared one percent from the opening bell, with the Dow Jones Industrial Average breaching 15,000 for the first time and the S&P cracking 1,600.

At the close, the Dow finished at 14,973.96, up 0.96 percent. The S&P 500 gained 1.05 percent to 1,614.42, and the Nasdaq Composite Index rose 38.01 (1.14 percent) to 3,378.63

The jobs report reverberated beyond US shores, with European markets shooting higher in parallel.

The DAX 30 index of leading German shares jumped by 2.02 percent to an all-time high of 8,122.29 points while in London, the FTSE 100 index added 0.94 percent to 6,521.46 points.

In Paris the CAC 40 jumped 1.40 percent to 3,912.95 points, its highest closing since July 2011.

"Today's report has clearly quashed worries that the US labor market has failed to improve this year and the economic recovery has stalled," ETX Capital economist Ishaq Siddiqi said.

"We're gaining more confidence that the recovery is gaining strength," said Greg Peterson, director of research at Ballentine Partners.

The soaring markets continue to be fuelled by the campaign by central banks to keep interest rates ultra-low to promote growth.

Those efforts were reaffirmed this week, when the Federal Reserve Wednesday maintained its aggressive bond-buying program, noting that it "continues to see downside risks to the economic outlook."

And on Thursday, the ECB slashed its benchmark interest rate as bank chief Mario Draghi signaled an accommodative monetary stance "for as long as needed."

The US jobs report raised confidence that the vectors of the US economy are pointing in the right direction, potentially also boosting the fortunes of its trading partners in Europe and beyond.

"The reason the market is heading higher is because most people on Wall Street expect the fundamentals to improve as the year progresses," said Sam Stovall, chief investment strategist at Standard & Poor's.

Still, Wall Street insiders said there is reason for caution.

The most recent round of quarterly corporate earnings has shown a pattern of solid earnings growth, but weak revenue growth. That trend suggests companies are ramping up profits by cutting costs, not by investing in growth.

"It's really a continuation of the half-speed recovery we've been in since this economy pulled out of recession," said Stovall.

The Friday jobs report culminated a busy week of generally positive economic news.

The Institute for Supply Management said its manufacturing purchasing managers index came in below expectations, falling to 50.7 in April from 51.3 in March.

But the monthly Case-Shiller index of city housing prices showed that prices rose a seasonally adjusted 1.2 percent in the 20 biggest urban markets. Investors were also heartened by a robust rise in the Conference Board's consumer confidence index in April, to 68.1 points from a revised 61.9 in March.

"It's pretty clear that the economic data all week long was better than expected," said Dan Greenhaus of BTIG.

Wall Street players disagree on whether the market still has more upside.

"We're getting sort of close" to a fully valued market, Stovall said.

Greenhaus said the historic patterns suggest a pullback is likely. Even so, many in the market want stocks to go higher.

"You have a situation where things are not as bad as we thought, but the Fed remains accomodative," Greenhaus said. "And the combination has been positive for risk assets and should continue to be."