NEW YORK (CNNMoney.com) -- Stocks rallied Friday, with the Nasdaq ending at an 18-month high, after a government report showed employers cut fewer positions last month than had been expected, in the latest sign that the pace of job cuts is slowing.
Treasury prices slumped, raising corresponding yields, as investors pulled money out of the supposedly safe haven and put it into stocks.
The Dow Jones industrial average (INDU) gained 122 points, or 1.2%. The S&P 500 index (SPX) added 16 points, or 1.4%. Both ended at the highest levels since Jan. 20.
The Nasdaq composite (COMP) gained 34 points, or 1.5%, closing at 2326.35, the highest point since Sept. 3, 2008, when it closed at 2323.73.
Stocks opened higher and built on those gains through the session, with a variety of stocks participating. On the Dow, 28 of 30 components rose, led by Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500), JPMorgan Chase (JPM, Fortune 500), American Express (AXP, Fortune 500), Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500) and 3M (MMM, Fortune 500).
Wall Street ended higher for the week, with all three major gauges posting gains for the third of the last four weeks.
Stocks fell last week as a slew of worse-than-expected economic reports exacerbated worries that the market was too optimistic about the pace of an economic recovery.
But this week some of those worries have been soothed following a number of in-line or better-than-expected reports on manufacturing, inflation and the labor market.
Jobs report: Employers cut a net total of 36,000 jobs last month, after jobs fell by 26,000 in January, the government reported. That was short of the expected 68,000 jobs lost, according to a consensus of economists surveyed by Briefing.com.
The unemployment rate, generated by a separate survey, held steady at 9.7%, versus forecasts for a rise to 9.8%.
It was not immediately clear what kind of impact the severe storms on the East Coast last month had on the results. On the upside, the health care and business services industries had solid job growth. Also, the number of temporary workers increased, typically seen as a good sign that the job market is starting to recover.
"The big mystery is whether the weather dragged on payrolls," said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. "The way I look at it is that it didn't have a huge impact, but it's going to take another month to tell."
He said that the report overall added to other indications that the healing process in the labor market continues, including Wednesday's report on private-sector employment from payroll services firm ADP and Thursday's weekly jobless claims report.
"The question now is at what pace we're healing," he said.
In other news, the House opted to amend a $15 billion Senate job creation bill before passing it, delaying its passage until at least next week. The bill must now go back to the Senate for approval before President Obama can sign it into law.
On the move: Apple (AAPL, Fortune 500) shares gained 3.9% after the company said it would release its much-anticipated iPad tablet computer April 3.
Broadband services firm RCN (RCNI) has agreed to be taken private by ABRY Partners, in a deal worth $536 million in cash plus the assumption of debt. Shares of RCN rallied 23% in unusually active Nasdaq trading.
Biotech InterMune (ITMN) rallied 59% in unusually active Nasdaq trading on bets that pirfenidone, the company's treatment for lung scarring, could get FDA approval.
An FDA panel gave the drug a mixed review, saying there wasn't enough substantial evidence of the effectiveness of the drug to approve it. However, some investors were expecting an even more negative review and shares surged.
Market breadth was positive. On the New York Stock Exchange, winners beat losers five to one on volume of 1.05 billion shares. On the Nasdaq, advancers topped decliners by over three to one on volume of 2.35 billion shares.
World Markets: In overseas trading, European markets rallied after Greece approved a package to save about $6.52 billion in budget costs and cut the country's ballooning deficit.
However, in Greece, the approval of the so-called austerity measures sparked riots in the streets as citizens opposed plans to hike taxes and cut workers' salaries.
The London FTSE gained 1.3%, Germany's DAX rose 1.4% and France's CAC 40 gained 2.1%.
Asian markets ended higher, with Japan's Nikkei gaining 2.2%.
The dollar and commodities: The dollar fell versus the euro and gained versus the yen.
U.S. light crude oil for April delivery rose $1.29 to settle at $81.50 a barrel on the New York Mercantile Exchange.
COMEX gold for May delivery rose $2.10 to settle at $1,135.20 per ounce.
Bonds: Treasury prices tumbled, raising the yield on the 10-year note to 3.68% from 3.60% late Thursday. Treasury prices and yields move in opposite directions. 
| Overnight Avg Rate | Latest | Change | Last Week |
|---|---|---|---|
| 30 yr fixed | 3.80% | 3.88% | |
| 15 yr fixed | 3.20% | 3.23% | |
| 5/1 ARM | 3.84% | 3.88% | |
| 30 yr refi | 3.82% | 3.93% | |
| 15 yr refi | 3.20% | 3.23% |
Today's featured rates:
| Index | Last | Change | % Change |
|---|---|---|---|
| Dow | 32,627.97 | -234.33 | -0.71% |
| Nasdaq | 13,215.24 | 99.07 | 0.76% |
| S&P 500 | 3,913.10 | -2.36 | -0.06% |
| Treasuries | 1.73 | 0.00 | 0.12% |
| Company | Price | Change | % Change |
|---|---|---|---|
| Ford Motor Co | 8.29 | 0.05 | 0.61% |
| Advanced Micro Devic... | 54.59 | 0.70 | 1.30% |
| Cisco Systems Inc | 47.49 | -2.44 | -4.89% |
| General Electric Co | 13.00 | -0.16 | -1.22% |
| Kraft Heinz Co | 27.84 | -2.20 | -7.32% |
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