NEW YORK (CNNMoney.com) -- Stocks rallied Friday after the August employment report showed that employers cut fewer jobs than economists were expecting and added more private-sector jobs than forecast.
The Dow Jones industrial average (INDU) was up 80 points, or 0.8%, about one hour into the session. The S&P 500 (SPX) gained 9 points, or 0.9%, and the Nasdaq (COMP) composite rose 24 points, or 1%
The upbeat jobs report, which came on the heels of improved manufacturing data earlier in the week, helped ease some concerns about the economy.
In addition to stocks, investors flocked to higher yielding currencies such as the euro and Canadian dollar. European stock markets also rallied.
The government's widely anticipated jobs report showed that the U.S. economy lost jobs for a third straight month in August, but employers cut fewer positions than economists had forecast.
The economy lost 54,000 last month. That compared to 131,000 jobs shed in July. Economists were expecting employers to slash 121,000 positions in August.
The private sector added 67,000, beating economists' expectations for a gain of 44,000 jobs.
The unemployment rate ticked up to 9.6%, from 9.5% in July, in line with expectations.
"August's payroll report is reassuring, suggesting that while economic growth may have slowed, it is not collapsing," said Paul Ashworth, senior U.S. economists at Capital Economics.
However, he added that the economy is not growing fast enough to create a significant number of jobs, which could lead to sluggish growth going forward. "We don't see that situation changing for quite some time."