Stocks up for third week: Dow over 17,000

U.S. stocks rallied Friday to log a third straight week of gains after the February jobs report came in stronger than expected, signaling that the economy continues to grow despite slowing growth overseas and early-year financial turbulence.

The Dow Jones industrial average also notched its first four-session winning streak since October. The blue chips ended up 63 points, or 0.4%. to 17,006.77, rising above 17,000 for the first time since Jan. 6. The broader Standard & Poor's 500 stock index gained 0.3% to 1999.99 and the Nasdaq composite climbed 0.2% to 4717.12.

The S&P has not closed above 2000 — a level it passed in intraday trading Friday — since Jan. 5.

Wall Street digested fresh signs of strength in the employment market that could potentially put the Federal Reserve back on track for interest rate hikes later this year.

The government reported that 242,000 jobs were created in February, topping the 195,000 to 200,000 new jobs economists expected. The unemployment rate remained unchanged at 4.9%, which was in-line with expectations.

Employers add better-than-expected 242,000 jobs in February

The February jobs report is the last key data release before the Fed's March meeting on the 15th and 16th, and investors know it could impact the pace and timing of potential interest rate hikes this year from the U.S. central bank. Currently, Wall Street has few if any rate hikes priced in, but a strong jobs report could put rate hikes back on the table.

But the jobs report also allayed some fears that the economy was being hurt by global troubles.

A big driver of the stock market's recent rally has been the belief that the Fed would dial back its rate-hike plans amid economic weakness around the globe and financial turbulence earlier in the year.

James Abate, chief investment officer at Centre Funds, is in the camp that believes Friday's strong jobs report could put the Fed back on track for rate hikes later this year, perhaps as early as June — a development he says is a negative for stocks as most Wall Street investors were positioning their portfolios with few, if any, rate hikes priced in.

Abate doesn't see the Fed moving in March, however.

"It's a negative for the stock market as stocks have rallied amid expectations that the Fed was off the table and might even need more stimulative efforts. But the pendulum has swung back the other way," Abate told USA TODAY. "It puts the Fed back in play, with the potential for them to start resuming its modest rate increases, perhaps as early as June.

But there were some blemishes in the report that could give the Fed pause and keep them on hold, according to Quincy Krosby, market strategist at Prudential Financial. Wage growth was weak, tumbling 0.1% versus an estimate of +0.2%. Average hourly wages dipped by 3 cents to $25.35, a sign of "slack" in the labor market.

Says Krosby: "(There was) something for everyone: recession fears ease with strong job growth but negative wage growth points to a Fed on hold for now. Clearly, slack in the employment landscape is being absorbed, but the Fed needs to see wage growth improve."

Stocks have rebounded from their worst start to a year ever, with the benchmark S&P 500 trimming its year-to-date loss to 2.15% after being down by more than 10% on Feb. 11. The U.S. market has also climbed out of correction territory, as it is no longer down more than 10% from its May peak. The S&P 500 is now 6.1% below its closing record high of 2130.82.

The stock rally has been driven by a number of factors. U.S. economic data has come in stronger-than-expected in recent weeks, reducing fears of recession. Oil prices have also stabilized, with U.S.-produced crude topping $36 a barrel Friday after dipping close to $25 bucks a barrel earlier in the year.

Global stock markets were also higher Friday. In Europe, the broad Stoxx Europe 600 closed 0.7% higher, the German DAX was up 0.7% and the CAC 40 in Paris finished 0.9% higher.

In Asia, the gains were more modest. Japan's Nikkei 225 closed 0.3% higher, while Hong Kong's Hang Seng index rose 1.2% and the Shanghai composite index in mainland China rose 0.5%.

Adam Shell on Twitter: @adamshell.