Adam Shell

USA TODAY

Stocks jumped Friday, with the Nasdaq and S&P 500 passing all-time closing highs, after the government reported a better-than-expected 255,000 jobs were created in July.

That strong number confirms the labor market remains strong after a May dip and the consumer-led economy is on solid footing, upbeat developments that could impact the timetable for interest rate hikes from the Federal Reserve.

The Nasdaq composite ended up 1.1% to 5221.12, topping its record close of 5218.86, set more than a year ago ― July 20, 2015.

The broad Standard & Poor's 500 stock index closed 0.9% higher to 2182.87. That's a few points above its all time closing high of 2175.03, set July 22.

The Dow Jones industrial average ― which has declined nine of the past 11 sessions since hitting a record high ― climbed 180 points, or 1%. That's a solid jump from before the pre-market jobs news, when Dow futures were up only about 24 points.

Payroll boom: The economy added 255,000 jobs in July

Jobs impress but Sept. rate hike not done deal

"The strong jobs report was more confirmation that the U.S. economy seems to be on solid footing," Tom Anderson, chief investment officer at Boston Private Wealth, told USA TODAY.

Market reaction was robust. U.S. government bonds sold off as the threat of a Fed rate hike sooner rather than later. The yield on the 10-year Treasury note jumped to 1.58%, from 1.5% before the release of the jobs report. The U.S. dollar also surged vs. a basket of foreign currencies, and was up 0.34% after being down 0.2% before the jobs data was released.

Gold fell more than $25 an ounce, or about 2%, to $1342.

The 255,000 new jobs topped analyst expectations for a jump of around 180,000. The unemployment rate remained steady at 4.9%. June's strong jobs count was revised up 5,000 to 292,000 and May's weak number was revised up 13,000 to 24,0000.

Wall Street is now hotly debating what the strong July jobs report means for the Federal Reserve and interest rates. After hiking short-term rates off zero in December, its first rate increase in nearly a decade, the Fed has held off on raising borrowing costs so far in 2016, citing global economic uncertainties, the fallout from the Brexit vote and a growth slowdown in the U.S. in the first three months of the year.

The quick takeaway from Wall Street pros is the upbeat jobs data the past two months will "engender more hawkish Fed expectations," or boost talk of a rate hike in September.

But most market participants still believe the Fed will hold off until its December meeting.

"I don't think this impacts September," says Anderson. "Our view is December is very much on the table."

Before hiking rates again, Anderson says: "There are enough uncertainties out there and this Fed will want to see a lot more supportive data before their next move" to increase rates.

A strong jobs report could keep a rate hike on the table for the Fed's next meeting in September, while a weak number will most likely keep the Fed in wait-and-see mode. Both the Fed and investors will get another monthly jobs report before the Fed's September 20-21 meeting.

Stock markets in Europe, which got a lift Thursday when the Bank of England cut interest rates for the first time in seven years to help offset economic harm caused by Britain's vote on June 23 to exit the European Union, were sporting modest gains. The broad Stoxx Europe 600 index was up 0.2%.

Stocks in Japan finished unchanged.