Many investors opted for blue chips and tech stocks over small-caps, although the latter rallied with the rest of the market by day’s end. Interest rate-sensitive sectors, including banking and construction, fell on fears that last week’s strong employment figures could signal sooner-than-expected rate hikes from the Federal Reserve.

Despite those concerns, the major indexes continued to recover from March’s correction. According to preliminary estimates, the Dow Jones industrial average gained 87.78, or 0.8 percent, to 10,558.37, after rising 2.5 percent last week. The index last closed above that level on March 5.

Broader stock indicators also advanced. The Standard & Poor’s 500 index rose 8.73, or 0.8 percent, to 1,150.54, also its best close since March 5. The gain followed a 3.1 percent rise last week.

The Nasdaq composite index was up 21.95, or 1.1 percent, at 2,079.12, its highest level since Feb. 17. Last week, the Nasdaq climbed 5 percent.

There was no major news to influence trading, but that didn’t matter to investors. Wall Street was coming off its best week of 2004, fueled by government reports that showed the economy created 308,000 jobs in March. The reading helped the markets move back into positive territory for the year.

"The jobs data last Friday has provided the missing ingredient that many people have been looking for over the last several months," said Michael Sheldon, chief market strategist at Spencer Clarke LLC. "We might be a little oversold in the short term, but I think investors are encouraged by the bounceback in the markets over the past few weeks."

However, some investors remained concerned that if job growth remains at such a high level, that could spur the Fed to raise interest rates earlier than expected to ensure that the recovery doesn’t fall victim to inflation.

"It’s not a question of when the Fed will raise rates — of course they are," said John Caldwell, chief investment strategist for KeyBanc Capital Markets Financial Group. "The more important question is, should they be raising rates sooner rather than later? The longer they wait, they more they may feel they have to act more aggressively."

Despite these concerns, investors were generally upbeat about earnings season, expected to start tomorrow with an announcement from industrial giant Alcoa Inc. Analysts said the number of positive pre-earnings reports have been much higher than in recent quarters, giving investors hope that overall earnings will remain positive. Alcoa was down a penny at $35.89.

Altria Group subsidiary Philip Morris will pay up to $1 billion to settle charges brought by the European Union that the cigarette maker is complicit in cigarette smuggling. Altria gained 42 cents to $55.29.

J.C. Penney Co. gained 7 cents to $34.90 after it announced it is selling its Eckerd drugstore chain to CVS Corp. and Canada’s Jean Coutu Group for more than $4.5 billion. CVS jumped $2.57 to $37.35.

Boeing Co. added 70 cents to $42.54 after the U.S. Air Force announced the aerospace company will be allowed to bid on up to $5 billion in rocket contracts.

Nortel Networks Corp. said it received a formal order of investigation from the Securities and Exchange Commission into the network equipment maker’s financial statements. Nortel dropped 23 cents to $6.06.

Declining issues narrowly outnumbered advancers on the New York Stock Exchange, where volume was 1.40 billion shares.