New York (CNN Business)Wall Street got a double dose of good news to cheer on Friday. The job market rebounded sharply in October following a disappointing September. And Pfizer surged after issuing positive data about its Covid-19 pill.
The Dow ended the day up more than 200 points, or 0.6%, and hit a new record high. The Nasdaq rose 0.2% and the S&P 500 gained 0.4%.
Both indexes reached new all-time highs on Friday, with the S&P topping the 4,700 mark in the morning and the Nasdaq exceeding 16,000 at one point. But all three indexes pulled back a bit from the peak levels they hit earlier in the day.
The Dow finished the week up 1.4% while the S&P 500 and Nasdaq have gained about 2% and 3%, respectively, over the past five days.
The S&P 500 has now rallied for the past seven days while the Nasdaq is on a ten-day winning streak. Both indexes have risen about 25% so far this year.
Shares of smaller companies, which tend to have more exposure to the American economy and less of an international presence than blue chips in the Dow, S&P 500 and Nasdaq, did even better. The Russell 2000 (RUT) index was up 1.4% and gained 6% this week. It also closed at a record high.
The CNN Business Fear & Greed Index, which measures seven gauges of investor sentiment, pushed even further into "Extreme Greed territory. It was showing levels of investor "Fear" just a month ago.
Investors cheered the fact that 531,000 jobs were added in October alone. Previous jobs gains for August and September were also revised higher.
"This was certainly robust. Investors are optimistic that we will get continued strong and even stronger numbers," said Julian Brigden, co-founder and president of MI2 Partners.
Brigden cautioned, however, that the labor data may make the Federal Reserve consider accelerating plans to start raising interest rates next year, especially if wages, which rose 4.9% over the past 12 months, spark more concerns about inflation.
"This does raise questions about how long the Fed can hold the line," he said, adding that there is a real risk that the central bank may suddenly become more concerned about inflation. "The market may have to factor in more rate hikes."
But another market expert argued that investors shouldn't worry about the Fed raising rates too quickly. For one, the Fed still has to finish cutting back on, or tapering, bond purchases. That process has only just begun.
Fed chair Jerome Powell was adamant during a press conference Thursday that he and other Fed members are fully aware that the job market is still not at full employment levels just yet.
"Powell did a masterful job of relieving investor worries that the Fed would act too aggressively following the taper. The market is still feeding off that," said Mark Luschini, chief investment strategist at Janney.
And any concerns about rate increases in 2022 were overshadowed Friday by more encouraging developments about the global fight against Covid-19.
Pfizer's good news about its experimental Covid pill, which the Big Pharma company said helped reduce the risk of hospitalization and death from coronavirus, also helped lift market sentiment. Shares of Pfizer (PFE) surged nearly 11% Friday.
Rival vaccine makers and drug companies Moderna (MRNA) and Merck (MRK) fell Friday, as did companies that had benefited from people staying at home, such as Peloton (PTON), which reported disappointing earnings and a weak outlook, as well as Zoom Video (ZM) and Teladoc (TDOC).
But so-called return to normal investments such as airline and cruise stocks surged. So did travel companies Airbnb and Expedia (EXPE), which both reported strong earnings after the closing bell Thursday.
"We're continuing to get through Covid and getting back to work," said Sam Solem, portfolio manager at Intrepid Private Wealth, who owns shares of Covid vaccine maker AstraZeneca (AZN).
"Vaccines are a key part of the solution but there has been some vaccine hesitancy," Solem added. "So having other therapeutics are just as important. Life can return to normal and people can go out to eat, go to gyms and head back to the office."
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