Wall Street closed out another solid week of gains Friday as the stock market hit its longest winning streak in a year and a half on the back of a solid jobs report.
Health care, energy and technology companies accounted for much of the broad rally, which extended the S&P 500's consecutive run of gains to seven days. The benchmark index also ended the week with its second straight weekly gain. Small company stocks did better than the rest of the market.
A strong rebound in hiring, which eased worries that the U.S. economy is slowing too sharply, helped put traders in a buying mood.
The jobs report also hit a happy medium for markets, strategists said. It was neither low enough to heighten recession worries nor high enough to prod the Federal Reserve to raise interest rates.
"The big driver now over the next few weeks will be earnings," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "The bar is low, expectations are low, and that sets the market up for maybe some modest upside."
The S&P 500 has climbed every day this week, though most of the gains were only modest, and it now sits just 1.4 percent away from its most recent record high, which was set in September. The index has been tacking on more gains since closing out its best quarter in nearly a decade, with a 13.1 percent rise in the first three months of the year.
On Friday, traders drew encouragement from the government's latest monthly tally of hiring.
The Labor Department said that U.S. employers added 196,000 jobs last month, more than economists had forecast. The strong rebound suggests the prior month's jobs report, which was shockingly weak, may have been an aberration and that the economy can continue to grow, albeit at a slower pace.
"This is another green shoot of growth," Steve Chiavarone, portfolio manager and equity strategist at Federated Investors, who pointed to other encouraging data about the U.S. and China's economies from recent weeks. He expects economic growth to re-accelerate after hitting a bottom in the first part of 2009.
And with the Fed on record saying it may not raise rates at all this year, after having done so four times in 2018, "good news now is just good news," Chiavarone said.
That's unlike prior market scares, when investors saw strong data as bad news because it could encourage a more aggressive Fed. The mentality flipped earlier this year after the Fed said it may not raise rates at all this year after raising them four times in 2018.
The unemployment rate last month remained near a 50-year low of 3.8%. Average hourly earnings rose 3.2% in March from a year earlier, which was weaker than economists' forecasts. Markets pay close attention to the numbers because while higher wages help workers afford to buy more things, they also crimp corporate profit margins.
Profitability is one of the market's top concerns as companies line up to begin reporting their first-quarter results next week.
Analysts expect companies in the S&P 500 to report a nearly 4% drop in earnings per share from a year earlier, which would be the first decline since the spring of 2016.
The expected drop in profits is due almost entirely to weaker profit margins. Analysts are forecasting that revenue grew nearly 5% for S&P 500 companies during the quarter. Companies are holding on to less of each $1 of revenue as profit than a year ago, analysts say.