US STOCKS-Wall Street closes higher after biggest payrolls jump on record

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By Stephen Culp

NEW YORK, July 2 (Reuters) - Wall Street closed higher and the Nasdaq reached an all-time closing high on Thursday as investors headed into their long holiday weekend buoyed by a record surge in payrolls, which provided assurance that the U.S. economic recovery was well under way.

All three major U.S. stock averages advanced, with the benchmark S&P 500 posting its fourth straight daily gain.

Massive stimulus and hopes for a speedy economic rebound have returned the S&P 500 and the Nasdaq to about 7% and 12% below their record highs reached in February.

The indexes registered strong gains for the week.

The U.S. economy added 4.8 million jobs in June according to the Labor Department, 1.8 million more than analysts expected, setting a second consecutive record.

Massive rehiring sent the unemployment rate down to 11.1%.

"There was a lot to like in economic data for the week," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "And there's still talk that there will be more stimulus from Washington after they get back from the Fourth of July break."

Still, even with May and June's consecutive record payroll gains, the labor market has still recovered only a fraction of the 22 million jobs lost in the March-April plunge.

The recovery of the U.S. economy, now in its sixth month of recession, could stall as new cases of COVID-19 hit record levels and several states hit hardest by the resurgence halted or reversed plans to reopen their economies.

On Thursday, Florida reported a record-shattering 10,000 new cases of the disease, worse than any European country reported at the peak of their outbreaks.

"With the spikes (in new COVID-19 cases) we've seen the larger states - Texas, California and Florida - those states have taken steps to turn back their re-opening plans," Nolte added. "And that will slow the overall growth and consumer spending in those regions."

In the coming weeks, market participants will train their focus on second-quarter reporting season. In aggregate, analysts now expect S&P earnings to have dropped by 43.1% as companies grappled with plunging demand and disrupted supply chains.

Unofficially, the Dow Jones Industrial Average rose 97.05 points, or 0.38%, to 25,832.02, the S&P 500 gained 14.23 points, or 0.46%, to 3,130.09 and the Nasdaq Composite added 55.38 points, or 0.55%, to 10,210.01.

Tesla Inc's shares surged after the electric car maker's second-quarter vehicle deliveries beat Wall Street estimates. (Reporting by Stephen Culp in New York Editing by Matthew Lewis)