The driver was jobs. U.S. employers added 165,000 of them in April and more in February and March than previously estimated. The unemployment rate fell to the lowest level in four years, 7.5 percent.
The surge in U.S. hiring comes after weeks of conflicting signals about the strength of the global economy. The unexpectedly strong numbers jolted markets higher from the start of trading.
"There's euphoria today," said Stephen Carl, the head equity trader at The Williams Capital Group. "That's what you'd have to call it."
On the floor of the New York Stock Exchange, brokers sported baseball caps emblazoned with "Dow 15,000."
The gains were broad. Eight of the 10 industry groups in the S&P 500 index rose. Three stocks rose for every one that fell on the NYSE.
Companies that stand to benefit most from an upturn in the economy led the stock market up. Industrial companies, those that make basic materials, and produce oil and gas rose the most in the S&P 500 index. U.S. Steel, General Electric and Dow Chemical were among the winners. Utilities, consumer-staple companies and other safe-play stocks trailed the market as investors took on more risk.
Small-company stocks are more risky than bigger companies but can also offer investors greater returns. On Friday, they rose at nearly double the pace of the broader market. The Russell 2000 jumped 14 points, or 1.5 percent, to 954, in afternoon trading.
The Nasdaq composite index rose 41 points to 3,381, an increase of 1.2 percent.
"We're breaking through psychological barriers and that will continue to bring investors off the sidelines," said Darrell Cronk, regional chief investment officer for Wells Fargo Private Bank. He called the jobs news "wonderful."
For more than a month, investors have had to wrestle with worrying reports on the world economy. First came news of falling retail sales in March, then a series of weak manufacturing reports and signs of an economic slowdown in China.
The first-quarter earnings season has been mixed, too. Though earnings have been higher than expected, many companies have reported little or no revenue growth, which has spooked investors.
Investors have also been concerned that higher Social Security payroll taxes and sweeping government spending cuts that took effect earlier this year will slow U.S. economic growth, and pinch corporate profits.
Friday's jobs numbers suggested the private sector might be strong enough to overcome those various obstacles.
In its report, the government revised its previous estimate of job gains up to 332,000 in February and 138,000 in March. The economy has created an average of 208,000 jobs a month from November through April above the 138,000 added in the previous six months.
"Jobs are key," said Randall Warren, chief investment officer of Warren Financial Service in Exton, Penn. "Everyone is worried about things like fiscal policy, the government spending money it doesn't have. If you want to turn that situation around, you have to get people off their couches."
Stock overseas rose on U.S. jobs report, too. The main indexes in France, Germany, Spain and Brazil rose 1 percent or more.
The S&P 500 is up 13 percent from the start of the year. The Dow is up 14 percent.
When the jobs numbers were announced at 8:30 a.m., stock-market futures surged and the price of crude oil quickly jumped as traders anticipated a pickup in the economy and rising demand for energy. Oil rose $1.47 to $95.48 a barrel.
The yield on the benchmark 10-year Treasury note jumped from its lowest level of the year, as traders moved money out of the safety of government bonds. The yield rose to 1.74 percent from 1.63 percent late Thursday.
Among other stocks making big moves on Friday:
Gilead Sciences jumped $2.92 to $55.11, a gain of 6 percent, one of the biggest gains in the S&P 500 index. The maker of HIV drugs reported a 63 percent surge in income in the first quarter thanks to lower costs and increased sales.
Kraft Foods rose $2.58 to $53.11, an increase of 5 percent. The food maker reported first-quarter income and revenue that beat the forecasts of Wall Street analysts as it increased sales and cut costs following its split from its global snack business.
LinkedIn, the professional networking social media site, sank 13 percent, losing $26.63, to $175.14. The company issued a revenue forecast for the rest of the year that was well below what financial analysts were expecting. LinkedIn went public in May 2011 at $45 a share.
Business Writer Matthew Craft contributed to this story.
Milestones for the Standard & Poor's 500 index
The Standard & Poor's 500 index broke through 1,600 Friday for the first time. It's been thirteen years since the S&P first closed above 1,500 points, which occurred toward the end of the dot-com bubble in March 2000.
Here's a look at the previous times that the S&P 500 index, a broad measure of large-company stocks, first closed above round-number levels, measured in increments of 100 points.
First close above • Date
1,500 • Mar. 22, 2000
1,400 • July 9, 1999
1,300 • Mar. 15, 1999
1,200 • Dec. 21, 1998
1,100 • Mar. 24, 1998
1,000 • Feb. 2, 1998
900 • July 2, 1997
800 • Feb. 12, 1997
700 • Oct. 4, 1996
600 • Nov. 17, 1995
500 • Mar. 24, 1995
400 • Dec. 26, 1991
300 • Mar. 23, 1987
200 • Nov. 21, 1985
100 • June 4, 1968
Source: S&P Dow Jones Indices