"For the time being, the sense is the sky is not falling. We have a major concern about the magnitude of the slowdown in the U.S. economy, so this is clearly good news," said Art Hogan, chief market strategist at Jefferies & Co.
"The revision is an eye popper -- most surprising is the 93,000 jobs they somehow missed," Hogan said.
"The caveat to all this euphoria would be two-fold -- there is a large bet that the Fed cuts rates in October; that bet may now not look so advantageous. You better be careful, sometimes that light at the end of a tunnel is a train," Hogan said.
At 3:30 p.m., the Dow Jones Industrial Average was up 124.1 points, or nearly 0.9%, at 14,098.4, readying it for a weekly gain of roughly 1.5%.
Of the blue-chip index's 30 components, 26 were trading higher.
Alcoa Inc. fronted the Dow's advance, its stock up 3.9%. The aluminum producer late Thursday detailed $845 million in restructuring charges.
Boeing Co. registered the largest losses on the Dow, its shares off 1.6% amid worries the aerospace giant may not meet its delivery schedule for its best-selling 787 Dreamliner.
The S&P 500 added 16.46 points, or more than 1%, to 1,559.50, after hitting a new record high of 1,5561.91 earlier in the session. The S&P was poised for a weekly climb of 2.2%.
The technology-heavy Nasdaq Composite also scored impressive gains, climbing 46.79 points, or 1.7%, to 2,780.36, bolstered by the likes of Yahoo! Inc. , up 3%, after Sanford Co. Bernstein & co. suggested the company should split into three parts to lift its market value. .
The Nasdaq was headed towards a weekly advance of nearly 3%.
Trading volume passed 976 million on the New York Stock Exchange, with advancing stocks beating decliners more than 3 to 1. On the Nasdaq, nearly 1.8 billion shares traded hands, and advancers topped declining issues about 3 to 1.
The government said the U.S. unemployment rate rose to 4.7% in September, but job growth was stronger than expected during the past three months, with nonfarm payrolls climbing by 110,000 in September, very close to expectations.
With the monthly unemployment report under its belt, the market's focus in part becomes deciding whether the data changes its recent view that the Federal Reserve would likely cap its two-day meeting at the end of the month with another interest-rate cut.
The Fed's half-point cut on Sept. 18 could be enough to keep the economy from sinking from the financial market turmoil, said Donald Kohn, vice chairman of the Fed Board, in a speech delivered Friday in Philadelphia. .
"On the whole, the Fed is likely to see continued risks to the economy, given the sub-par pace of job growth, which means an Oct. 31 rate cut is still possible, especially given the Fed is acting preemptively to forestall economic weakness," said Tony Crescenzi, chief bond market strategist, Miller Tabak & Co. LLC.
"Today's data do not lead us to sharply lower our odds of an October ease. What they do is to reinforce our confidence that the economy will not prove weak enough to require further easing beyond the end of the month," wrote RBS Greenwich Capital analyst Stephen Stanley.
"Solid payroll gains combined with upward revisions to the previous two months erased much of the weakness suggested by last month's payroll report. Today's release lowers the odds of a follow-on rate cut at the October FOMC meeting," said Lehman Brothers analyst Drew Matus.
Dow component Walt Disney Co. gained 1.9% after Standard & Poor's Ratings Serices raised its corporate credit and commercial paper ratings on the company.
Commercial Metals Co. jumped 7.6% after Goldman Sachs added the Irving, Taxed-based scrap metal recycler to its list of top U.S. stocks to own.
Map Pharmaceuticals Inc. climbed 15.4% on an IPO, with the company ricing 5 million shares at $12 each in a bid to raise $60 million .
Merrill Lynch & Co. shares gained 2.5% after the brokerage warned it would write down almost $5.5 billion when it announces third-quarter results.
Before the open, Washington Mutual Inc. said it expects a third-quarter earnings drop of about 75% due in large part to the weakened housing market. Its shares were recently up 2.5%.
Lawson Software Inc. shares were down 6% in the wake of the business software company's second-quarter forecast, which fell short of expectations.
Barclays PLC has withdrawn its $84 billion bid for ABN Amro Holding NV after its tender netted too few shares, leaving a group led by Royal Bank of Scotland PLC to claim victory with a $101 billion bid.
Research in Motion Ltd. shares climbed 13.6% after the Blackberry maker doubled its bottom line in its second quarter. .
Sprint Nextel Corp. is looking for a replacement chief executive, according to sources cited by The Wall Street Journal. Its shares were off 1.6%.
In trade on the New York Mercantile Exchange, crude-oil futures for November delivery fell 65 cents, or 0.7%, to $80.79, while the December contract gained $3.50, or 0.5%, to $747.30. .
The dollar could not sustain a rally on Friday's employment report and fell back to early levels against major currencies. The euro was up about 0.1% at $1.4134. The dollar was trading at 116.93 yen, down from 116.91 after the jobs data. .
Treasurys sold off, with the benchmark 10-year note falling 1 1/32 to 100 28/32, its yield up to 4.641%. .
In Europe, shares rose after the well-received jobs data from the U.S. .
Asian stocks closed mixed, with Hong Kong rebounding strongly after two declining sessions to emerge as the best performer at week's end. .
By Kate Gibson