By Caitlin Ostroff and Caitlin McCabe 

U.S. stocks jumped Thursday after the June employment report showed the economy added more jobs than expected, reassuring investors that the economic recovery is continuing.

The U.S. gained 4.8 million jobs last month, while the unemployment rate ticked down to 11.1% from 13.3% in May. That marked the second month in a row that employers added jobs since massive waves of layoffs gripped the country earlier in the coronavirus pandemic. Both figures beat the expectations of economists surveyed by The Wall Street Journal.

The Dow Jones Industrial Average climbed about 220 points, or 0.9%, in midday trading after earlier rising nearly 470 points. The S&P 500 was recently up 0.9%, on pace for its fourth day of gains.

Gains across the market were broad-based, with the real-estate sector notching the only loss of the S&P 500's 11 groups. The energy sector led the way, with Apache jumping 4.1%.

Growth stocks rallied, too. Microsoft added 1% and Tesla surged 6.7% after the electric car maker said Thursday that it produced more than 82,000 vehicles and delivered approximately 90,650 vehicles in the second quarter.

Those gains helped put the Nasdaq Composite, recently up 0.9%, on course for a new all-time-high.

"This continues the trend that we've seen here of economic data coming in stronger than expected," said Jim Baird, chief investment officer of Plante Moran Financial Advisors. "It all points to a recovery that is clearly under way."

Investors said Thursday's gains could put stocks on track for another big rally after largely being stuck in a narrow trading pattern in June.

All three major indexes are on course to finish the week up at least 3.8%. Markets are closed Friday for the Independence Day holiday

Still, some investors noted, many potential obstacles to a full economic recovery loom -- which may make any stock market recovery more bumpy in the future. Even with Thursday's employment gains, the jobless rate is still at historically high levels and the U.S. labor market is operating with about 15 million fewer jobs than in February.

Even more, much of the data from Thursday's jobs report was collected while local economic re-openings were well under way. A recent rise in coronavirus infections -- which has paused or reversed reopening plans in some states -- could stall next month's employment gains.

Weekly unemployment claims data, which offer a more up-to-date view on the U.S. labor market, showed the number of new applications for jobless benefits fell by 55,000 to 1.43 million last week.

The number of applications for jobless benefits filed every week has come down from a peak of nearly 7 million in late March, but has stabilized near a historically high 1.5 million, an indication that companies are continuing to cut jobs.

Investors said they would be watching to see if rising employment numbers result in an uptick in consumer spending, which accounts for roughly two-third of U.S. economic activity.

"Everybody is obviously watching the changes in the American labor market," said Florian Hense, an economist at Berenberg Bank. "The U.S. consumer is the most important driver of the global economy."

Along with any clues from the Federal Reserve, investors will be watching in the weeks ahead to see if U.S. political leaders offer additional stimulus measures.

Jamie Cox, managing partner for Harris Financial Group, said the June jobs report suggests the Paycheck Protection Program is starting to help. Still, he said, investors will want to see that investors are continuing to spend.

A recent surge in coronavirus cases, however, could complicate Americans' spending plans. Apple, for example, as of Wednesday had closed 16 locations in Florida, Mississippi, Texas and Utah, with plans to shut down 30 more locations by Thursday. McDonald's is also pausing the reopening of dine-in service in the U.S.

The fast-food retailer's shares were recently down about 0.5%. Apple, in contrast, notched a 0.7% gain.

Beyond energy stocks, the materials sector also rallied, as did other groups of cyclical stocks that were beaten-down earlier this year. Xerox Holdings surged 5.1%, Vulcan Materials rallied 3.2% and cosmetics company Coty added 3.4%.

Globally, stocks also traded higher. The pan-continental Stoxx Europe 600 gained 2%, while Hong Kong's Hang Seng Index closed up 2.9% and the Shanghai Composite Index gained 2.1%.

In bond markets, the yield on the 10-year Treasury note fell to 0.674% from Wednesday's 0.682%. U.S. bond markets will close at 2 p.m. ET ahead of the holiday.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and Caitlin McCabe at caitlin.mccabe@wsj.com

(END) Dow Jones Newswires

July 02, 2020 12:17 ET (16:17 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.