The major indexes all posted weekly gains, after Thursday closing higher on the month of May.
"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 closed up 40.47 points at 13,668.11, after setting an intraday record of 13,692. The Dow posted a weekly gain of 1.2%.
Among Dow components, Wal-Mart Stores Inc. closed almost 4% higher at $49.47 as investors reacted positively to a new $15 billion stock buyback program and news that the company will slow its opening of stores. General Motors gained 1.7% to $30.50 after releasing its May sales tallies.
The S&P 500 , which Wednesday and Thursday set closing records, took a new record by rising 5.72 points to close at 1,536.34 as the Nasdaq Composite rose 9.40 points to 2,613.92. The S&P 500 took a 1.4% weekly gain and the Nasdaq had a 2.2% rise.
Volume was a bit light, with 1.481 billion shares traded on the New York Stock Exchange and about 1.917 billion on the Nasdaq. There were more than 11 rising stocks for every five on the decline on the NYSE and 18 winners for every 11 losers on the Nasdaq.
Investors Friday cheered 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. Shares of Ford Motor Co. closed up 0.1% at $8.35 despite news that its sales last month fell 6.8%.
DaimlerChrysler said its Chrysler U.S. unit's May auto sales rose 4% on strong sales of its Jeep brand vehicles. The stock rose 0.2% to $91.68.
Shares of GM shook off morning losses to finish up 1.7% at $30.50 after announcing that in May its sales rose more than 4%, while Toyota Motor Corp. advanced 1.8% after unveiling a 14% increase in sales.
Shares of Dell closed 1.7% higher at $27.32. 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 14.8% to $61.20. The stocprice jump followed 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 ended down almost 1% at $50.22. 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.
Among Dow components, 3M threw off morning weakness to end up 0.5% at $88.43. The company has acquired the manufacturing and marketing 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 closed down 16/32 at 96-15/32 with a yield of 4.950%. 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 four-month high vs. the yen, after the jobs report reinforced the view that the Fed won't drop rates this year.
The euro late in the day was down 0.06% at $1.3445, while the dollar was up 0.2% at 122.01 yen.
Commodities closed higher, with crude futures finishing up $1.07 at $65.08 a barrel, getting a boost from stronger gasoline prices. Reformulated gasoline futures for July gained 1.9% to close at $2.2446 a gallon on the New York Mercantile Exchange.
The front-month gold contract closed up $10.20 at $671.20 an ounce, a three-week high, as the metals market mostly ignored the stronger dollar.
By Leslie Wines