Reporting from New York — Wall Street took some bad employment statistics as a good omen, sending the Dow Jones industrial average above 11,000 for the first time since May.
Other market indexes also gained as optimism among investors arose from the perversely upbeat belief that the bad jobs situation would force the Federal Reserve to take steps to stimulate the economy further.
"This is a case in which bad news is actually good news," said Sam Stovall, the chief investment strategist at Standard & Poor's. "If things don't look as if they are healing on their own, the market now is expecting an additional stimulus offered by the Federal Reserve or perhaps even by Congress."
The Dow gained 57.9 points, or 0.6%, to close at 11,006.48 after the Labor Department announced that the economy had lost jobs in September for the fourth straight month. The S&P 500 index rose 7.1 points, or 0.6%, to 1165.15, and the tech-heavy Nasdaq composite index grew 18.2 points, or 0.8%, to 2401.91.
Underneath the headline loss of 95,000 jobs there was some hopeful news in the uptick in private-sector jobs — the ninth straight month of increases, albeit mild. Many economists believe that the private sector needs to lead an economic recovery.
The market also was encouraged by the first corporate reports for quarterly earnings.
Late Thursday, Alcoa Inc., the aluminum company that typically kicks off each season of earnings announcements, posted stronger-than-expected results. Though its earnings of $61 million were down 21% from last year's third quarter, its revenue increased 15% to $5.3 billion. On Friday its shares jumped 69 cents, or 5.7%, to $12.89.
"There are signals that we're coming into a strong earnings season, and the market is buying into that," said Thomas Belesis, chief executive of the trading firm John Thomas Financial.
The Dow dropped below 11,000 during the dark days of the financial crisis in September 2008 and has since crossed above it only for a few weeks in April and early May this year.
Over the course of September, the markets steadily advanced, partly on a growing belief that business-friendly Republicans would win big in midterm elections.
"This is a stock-market-friendly scenario," said Allen Sinai, president of Decision Economics in New York. "There is some betting on that, even though we haven't had the midterm elections."
The monthly unemployment report released Friday was the last one before the Nov. 2 elections, and the disappointing numbers make it seem more likely that incumbent Democrats will struggle against Republican challengers.
The bigger talk on the street, though, was about what the Federal Reserve will do next. In September, the central bank's governing board said it was "prepared to provide additional accommodation, if needed, to support the economic recovery."
Since then, a few top policymakers have argued that the Fed should inject more money into the economy by buying Treasury bonds — a policy known as quantitative easing.
Bank of America Merrill Lynch economists said in a note Friday that they expect an initial bond-purchase program of $500 billion over six months, beginning in November. The launch of that program should "assure a further decline in [bond] rates," they said.
The anticipation of a bond-buying spree sent the yield on five-year Treasury bonds down Friday to its lowest level since early last year.
And any massive flow of new dollars from the Federal Reserve would probably devalue the dollar further. The dollar's value against six other major currencies fell to a nine-month low Friday, but it was off less than 0.2% from Thursday.
There are widespread questions about whether quantitative easing would stimulate the economy in the long run. After earlier pushes by the central bank to get more money into the economy, many banks have hoarded the cash rather than putting it to use.
Investors put aside those concerns Friday as they cheered the prospect for an immediate jolt.
"Basically it's more of a short-term thing," S&P's Stovall said. "How will we pay for it? Who knows. But at least they'll be happy with the stimulus."
On the commodities markets Friday, a key index of raw materials prices surged 2.7% to a two-year high. Commodities were benefiting from the dollar's woes and a surprise cut in U.S. crop-supply forecasts.