US STOCKS-Wall Street rallies to end higher on surprise U.S. jobs report

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* U.S. payrolls unexpectedly jump by 2.5 mln in May
* Boeing jumps on hopes of a pickup in air travel
* Cyclicals, small caps and transports outperform
* Indexes up: Dow 3.15%, S&P 500 2.62%, Nasdaq 2.06%

(Updates with closing prices)
By Stephen Culp
NEW YORK, June 5 (Reuters) - Wall Street surged on Friday
after a strikingly upbeat May jobs report unexpectedly provided
the clearest evidence yet that the U.S. economy is headed for a
quicker-than-anticipated recovery.
The Nasdaq breached its all-time closing high reached in
February but pared its gains to end the session a hair's breadth
below it. All three major U.S. stock indexes advanced 2% or
more.
The S&P 500 and the Dow are now 5.7% and 8.3% below their
respective closing records.
The benchmark S&P 500 is now 1.1% below its year-to-date
break-even level.
The U.S. economy added a remarkable 2.5 million jobs last
month, rebounding from April's record 20.7 million drop and
pushing the unemployment rate down to 13.3%. Analysts saw
unemployment soaring to a historic 19.8%. "The numbers are a huge surprise to the upside," said
Michael Arone, chief investment strategist at State Street
Global Advisors in Boston.
"It would suggest a further confirmation the economy is
coming back online," Arone added. "This is a strong signal that
the effects are temporary and that the economy is improving."
"Long may it last."
U.S. Treasury yields rose on the jobs data, giving a boost
to interest rate-sensitive banks and sending the S&P 500 Banks
index .SPXBK up 4.9%. Airlines, among the hardest hit by the coronavirus crisis,
soared, with the ARCA Airlines index jumping 5.7%.
But the World Health Organization warned that the COVID-19
pandemic, which brought the global economy to its knees in the
wake of mandated shutdowns, is far from over and new cases are
on the rise. Market participants now turn their focus to the U.S. Federal
Reserve, which holds a monetary policy meeting next week where
the latest jobs data will almost certainly be discussed.
The Dow Jones Industrial Average .DJI rose 829.16 points,
or 3.15%, to 27,110.98, the S&P 500 .SPX gained 81.58 points,
or 2.62%, to 3,193.93 and the Nasdaq Composite .IXIC added
198.27 points, or 2.06%, to 9,814.08.
All 11 major sectors of the S&P 500 ended the session well
in the black, with energy .SPNY , financials .SPSY and
industrials .SPLRCI leading the gainers in a continuation of a
rotation into cyclicals, which were beaten up amid economic
lockdowns.
Small caps and transportation stocks also outperformed, with
the Russell 2000 .RUT and Dow Transportation .DJT up 3.8%
and 3.1%, respectively.
Boeing Co BA.N surged 11.5%, giving biggest the blue-chip
Dow its biggest boost, on hopes of a pickup in air travel a day
after American Airlines Group Inc AAL.O and United Airlines
UAL.O said they would boost their U.S. flight schedule next
month. Shares of luxury retailer Tiffany & Co TIF.N jumped 6.5%
after Reuters reported LVMH (PA:LVMH)'s $16.2-billion takeover deal was
back on track. Drugmaker Novavax Inc NVAX.O advanced 3.7% following its
announcement that the U.S. Department of Defense would give it
up to $60 million to manufacture its COVID-19 vaccine candidate.
Advancing issues outnumbered declining ones on the NYSE by a
5.03-to-1 ratio; on Nasdaq, a 3.08-to-1 ratio favored advancers.
The S&P 500 posted 26 new 52-week highs and no new lows; the
Nasdaq Composite recorded 89 new highs and three new lows.
Volume on U.S. exchanges was 17.56 billion shares, compared
with the 12.03 billion average over the last 20 trading days.