"The real key to today's rally is the fact that inflation pressures were contained," said Peter Cardillo, chief market economist at Avalon Partners. "Commodities prices are rising, but it is not showing up."
The Dow Jones Industrial Average last was up 18 points at 13,646, after setting a new intraday record of 13,692. Among Dow components, Wal-Mart Stores Inc. was 3.9% higher at $49.47 as investors reacted positively to a new $15 billion stock buyback program.
The S&P 500 , which Thursday set a record at the close, was 3.49 points higher at 1,534.20 as the Nasdaq Composite rose 7.70 points to 2,612.22.
Volume was a bit light, with 725 million shares traded on the New York Stock Exchange and just more than 1 billion on the Nasdaq.
On Friday investors drew encouragement from the Labor Department's report that 157,000 jobs were created last month, exceeding a MarketWatch forecast of 150,000. Unemployment held steady at 4.5%.
"This news is a bit better than people were expecting," said Georges Yared of Yared Investment Research. The data show steady economic growth and confirm the underlying strength of the equities market, Yared added.
Separately, the Commerce Department reported that core consumer price inflation increased just 0.1% in April, bringing the year-over-year increase to 2%. This marks the first time in 14 months that core prices have been inside the Fed's unofficial target zone of 1% to 2%.
In another positive sign for the economy, the Institute of Supply Management said its May index of manufacturing activity rose to 55% from 54.7% in April. Economists surveyed by MarketWatch expected the ISM to drop to 53.5% in May. During the past four months, the ISM has shown more manufacturing business growing than shrinking.
The reading was the highest for ISM in a year.
However, the University of Michigan's May consumer sentiment survey cut against the picture of economic improvement. The headline reading was revised down to 88.3 from 88.7.
The pending home sales index for April also showed deterioration. The index, which tracks contracts that have been signed for transactions that have not closed, posted a decline of 3.2%.
Stocks of note
Auto stocks were in focus as investors sorted through May sales volumes. Ford Motor Co. was up just 1 cent at $8.35 after news that its sales last month fell 6.8% to 259,470.
DaimlerChrysler said its Chrysler U.S. unit's May auto sales rose 4% on strong sales of jeeps. The sock was up 0.4% at $81.82.
Shares of General Motors Corp. were up 0.2% at $30.05 ahead of its monthly sales tally.
Shares of Dell were 1.8% higher at $27.36. On Thursday the company reported a slight drop in quarterly earnings and said it would slash 10% of its workforce, or about 8,800 jobs. The company is attempting to recoup some of the market share it has lost to the likes of rival Hewlett-Packard Co. .
Shares of Dow Jones shot up 14.5% to $61.03. The stock price jump follows news that the Bancroft family, which holds a controlling interest in the media company, said it will meet with Rupert Murdoch's News Corp. -- and any others interested -- about a possible sale.
Forest Laboratories last was down 1% at $50.20. A drug for strokes that it holds the U.S. and Canadian rights for did not meet a Phase Three endpoint in a clinical trial.
Wal-Mart Stores Inc. investors also reacted well to news that the company will slow its opening of stores, adding to its 3.9% gain.
Among Dow components, 3M was off 23 cents at $87.73. The company has acquired the manufacturing and markeing rights to the Peridex brand periodontal rinse product from Zila Inc. for $9.5 million in cash.
Treasurys extended their losses after the May jobs report. The benchmark 10-year Treasury note last was down 15/32 at 96-16/32 with a yield of 4.952%. Bond analysts think the benchmark yield is likely to shoot through the 5% level in coming sessions.
The dollar rose against other major currencies, touching a three-and-a-half month high vs. the yen, after the jobs report reinforced the view that the Fed won't drop rates this year.
The euro was last down 0.1% at $1.3437, while the dollar was up 0.3% at 122.04 yen.
Commodities were higher, with crude futures up 84 cents at $64.85 a barrel, getting a boost from stronger gasoline prices. Reformulated gasoline futures were up 1.4%, or 3.18 cents, at $1.884 a gallon on the New York Mercantile Exchange.
The front-month gold contract was up $8.80 at $669.80 an ounce, as the metals market managed to ignore the stronger dollar.
By Leslie Wines