The major domestic equity indexes rose in a broad-based rally on Friday as stronger-than-expected job growth in April coupled with muted wage gains left the Street ecstatic over the outlook for the economy and interest rates. The Nasdaq registered a record high close, while the S&P 500 ended just shy of a record high finish.

The Labor Department said employers added 263,000 jobs in April, which far exceeded expectations, and the unemployment rate dropped to 3.6 percent, the lowest level since December 1969. Average hourly earnings came in just shy of expectations, indicating muted inflationary pressure.

The data supports the Federal Reserve’s patient stance toward raising interest rates, which is a positive for stocks.

Doing its part to push the indexes higher, Amazon rose 3.2 percent, after CNBC reported that Berkshire Hathaway bought shares of the internet retailing giant for the first time.

The consumer discretionary sector rose 1.5 percent, leading a rally among the 11 major S&P sectors.

For the week, the S&P 500 and Nasdaq were up 0.2 percent while the Dow slipped 0.2 percent.

With nearly 400 S&P 500 companies having reported quarterly results so far, three-quarters have exceeded earnings estimates, according to Refinitiv data.

The upbeat reports have turned around the S&P 500 earnings estimate for the first quarter to a rise of almost 1 percent compared with the 2 percent decline projected at the start of April.

Newell Brand shares rose 13.5 percent after the maker of Rubbermaid and other consumer goods exceeded Wall Street expectations for quarterly adjusted profit as it benefited from cost savings and higher pricing.

Arista Networks fell 10.4 percent after it forecast weak current-quarter revenue, while Activision Blizzard fell 4.8 percent after the videogame maker forecast current-quarter earnings numbers below expectations as it puts more money into its franchises to battle competition.

Approximately 6.47 billion shares changed hands on the major domestic equity exchanges on Friday, as compared to the 6.62 billion share average over the past 20 trading days.

Jobs Number Up Sharply – Unemployment Falls

The nation’s jobs number increased sharply in April and the unemployment rate dropped to a more than 49-year low of 3.6 percent, pointing to solid economic growth.

The Labor Department’s closely watched monthly employment report on Friday, however, showed steady wage gains last month, consistent with moderate inflation. The decline in the unemployment rate was because people left the labor force, suggesting some slack in the jobs market remains.

The report was broadly supportive of the Federal Reserve’s decision on Wednesday to keep interest rates unchanged and signal little desire to adjust monetary policy anytime soon. Fed Chair Jerome Powell described the economy and job growth as “a bit stronger than we anticipated” and inflation “somewhat weaker.”

Nonfarm payrolls increased by 263,000 jobs last month, amid gains in hiring nearly across all sectors. Data for February and March was revised up to show 16,000 more jobs created than previously reported. Job growth is well above the roughly 100,000 needed per month to keep up with growth in the working-age population.

The second month of strong job growth was further evidence that February’s paltry 56,000 increase in jobs was an aberration. It also effectively put to rest concerns about a recession and diminish expectations of an interest rate cut this year that had been fanned by a brief inversion of the Treasury yield curve in March.

Job growth remains strong, despite anecdotal evidence of worker shortages in the transportation, manufacturing and construction industries, suggesting some slack still remains in the labor market.

Steadily rising wages have on balance been keeping workers in the labor force and drawing back those who had dropped out. Average hourly earnings rose six cents, or 0.2 percent in April after rising by the same margin in March. That kept the annual increase in wages at 3.2 percent.

Though wage growth is not strong enough to drive up inflation, it is seen as being enough to underpin economic growth as the stimulus from last year’s $1.5 trillion tax cut wanes. 

The two-tenths of a percentage point decline in the unemployment rate from 3.8 percent in March was because 490,000 people left the labor force in April. The jobless rate is now below the 3.7 percent that Fed officials project it will be by the end of the year.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell to 62.8 percent in April from 63.0 percent in March. The participation rate hit a more than five-year high of 63.2 percent in January. The low participation rate suggests some slack remains in the labor market.

There is the possibility that job growth will slow this year as fewer workers become available, which will push up wages and lift inflation back to the Fed’s 2 percent target. An inflation measure tracked by the U.S. central bank increased 1.6 percent in the year to March, the smallest gain in 14 months, from 1.7 percent in February.

Employment at construction sites increased by 33,000 jobs in April, rising for a second straight month. Manufacturing sector payrolls rebounded by 4,000 jobs after being unchanged in March. The industry is being pressured by layoffs in the automobile sector as assembly plants try to cope with declining sales and an inventory overhang.

Government payrolls increased by 27,000 in April, likely driven by early hiring for the 2020 Census.