The triple-digit rally gave the Dow its fifth straight week of gains. And took it all the way back up to 11,577.74, less than 150 points from its record high posted Jan. 14, 2000, reports CBS News correspondent Anthony Mason.
Broader stock indicators were higher. The Standard & Poor's 500 index gained 13.51, or 1.03 percent, to 1,325.76, its highest level since Feb. 15, 2001; the Nasdaq composite index advanced 18.67, or 0.8 percent, to 2,342.57.
Investors saw a slowdown in April employment growth as the latest sign of a softening economy, a reason for the Fed to stop raising interest rates. That countered worries over rising wages, which followed an upswing in employers' labor costs on Thursday.
Jack Caffrey, equities strategist for JPMorgan Private Bank, said the market appeared to be focusing on recent positive data instead of considering the long-term consequences of why the Fed would stop boosting rates, because economic growth has slowed enough to contain inflation.
"People are taking the weaker job creation, the stability in the unemployment rate and the uptick in jobless claims and spinning that into a hope the Fed will move to the sideline sooner than later," Caffrey said. "It's almost a hope-for-relief rally instead of a 'the Fed is done, things are slowing down' mentality."
Falling oil prices also helped stocks to their gains, although some believe higher gasoline prices will pressure consumer spending and keep the economy from overheating.
But the seemed to be enough to counter worries over rising wages.
Still, the potential for inflation concerns some economists, including Wachovia senior economist Mark Vitner.
"It's bad news in a sense, in that it's very hard for workers to keep up with inflation — particularly with gasoline prices rising as much as they are," Vitner told CBS Radio News.
Meanwhile, President Bush spoke in 86-year-old Frager's Hardware Store in Washington as part of his effort to convince Americans that the economy is robust and to highlight the jobs added to business payrolls across the country in April.
Mr. Bush also held steady his threat to veto any that exceeds his request and urged Congress to finalize an agreement to extend tax cuts.
He celebrated that the unemployment rate remained at 4.7 percent. Yet the April report showed that the level of new hiring slowed significantly, leading economists to believe that the economy is headed for a much smaller pace of growth than in the first quarter.
"Small business is doing well," the president said. He added that "one of the things that Congress has to be mindful of is that the economic growth we're seeing — the strong economic growth — is dependent on good tax policy."
But the president's moves are facing harsh criticism from recent poll numbers that suggest other economic factors, such as soaring gas prices and health-care costs, are weighing on his approval ratings.
A new CBS News poll shows that only 33 percent approve of his job performance, Mr. Bush's lowest approval rating yet in a CBS News poll and the same number a recent AP/Ipsos poll found. A majority — 58 percent of those polled — say they disapprove of the president.
Oil prices exceeded $75 a barrel, a record high, in late April. They have been gyrating since then and dropped below $70 a barrel on Thursday. Gasoline prices have marched higher and are above $3 a gallon in a number of areas.
The Fed has said future rate hikes will depend on inflation data.
"This suggests that companies are not aggressively hiring," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. "Companies are showing some caution with the expectation that rising energy prices, higher interest rates and a slowing housing market may temper overall economic activity down the road," she said.
Still, economists didn't believe that April's slower job growth was a sign that the economy is heading for a serious setback. They pointed out that other recent barometers — including retail sales, manufacturing and service-sector activity — all looked very healthy for April.
But it wasn't enough growth to please some in the financial sector.
"This is a disappointing number," Chief Economist David Wyss of Standard and Poors told CBS Radio News. "We were expecting another 200,000-job month, and we didn't get it."
The report comes as analysts expect the economy to log slower growth in the April-to-June quarter, predicting it will expand by about 3 percent. Such growth would mark a moderation from the brisk 4.8 percent pace registered in the January-to-March period — but would still be considered healthy.
Just how much strength the second quarter shows will be affected by the appetite of businesses and consumers to spend and invest.
So far, they have been holding up under the strain of high energy prices.
Separately, consumer confidence sank to a seven-month low as sticker shock from rising gasoline prices made Americans anxious about the economy's prospects and the strain on their own budgets.