NEW YORK (MarketWatch) — U.S. stocks rose slightly Friday, extending their climb to fresh two-year highs as investors were encouraged by a report of stronger-than-expected job growth for October.

Stocks remained hamstrung late in the session Friday, unable to rise substantially, but not losing much ground, after data showed the U.S. economy added jobs in October for the first time in five months, but the unemployment rate remained stubbornly high at 9.6%.

Hot Stocks: AIG finds higher ground

The Dow Jones Industrial Average DJIA, +0.62% rose 9.24 points, or 0.08%, to 11,444.08. The measure was weighed down by Kraft Foods Inc. KFT, which fell 2.2%. The food giant posted an 8.5% decline in third-quarter profit as higher taxes, jumps in advertising spending and costs for integrating Cadbury weighed on its shares. Also, Starbucks Corp. SBUX, +1.26% plans to discontinue its arrangement to use Kraft as a distributor for its coffee products.

The Nasdaq Composite Index COMP, +1.11% tacked on 1.64, or 0.06%, to 2,578.98. The Standard & Poor’s 500 Index SPX, +0.72% edged up 0.4% to 1,225.85, with its financial sector posting the biggest gains.

The small gains on Friday, which represents the 100-year anniversary of the drafting of legislation for the creation of the Federal Reserve, came at the conclusion of a strong week that saw the Dow surge to its highest level since early September 2008, prior to the collapse of Lehman Brothers.

The Dow climbed 2.9% during the week, while the S&P 500 rose 3.6% over the period.

Fueling the climb, the Republican Party won control of the House of Representatives and the Fed pledged to give the economy a $600 billion stimulus shot, dubbed by market participants as QE2.

“This whole week has been packed full of excitement,” said Zach Jonson, portfolio manager of the ICON Materials Fund. “There’s been a lot of clarity.”

Investors were encouraged Friday after nonfarm payrolls rose by a greater-than-expected 151,000 last month as private-sector employers added 159,000 jobs, the Labor Department said. Read a round-up of reactions to payrolls data.

In addition, the September number received a positive revision to show payrolls fell 41,000, less than an original estimate of a 95,000 decline.Read more on payrolls report.

“Seeing that is definitely a very good sign,” Jonson said. Still, he noted, “the household survey told a completely different story.”

The unemployment rate, which is obtained from a separate household survey, remained at a lofty 9.6% in October. About 14.8 million people who would like to work can’t get a job. Read commentary on why good payrolls data isn’t enough.

Data on the housing sector served as another reminder of continued troubles in the economy. A report from the National Association of Realtors showed U.S. pending home sales slipped for the first time in three months in September as foreclosure moratoriums spurred by shoddy mortgage-documentation practices slowed sales.

The financial sector was the strongest on reports that the Fed is poised to allow healthy banks to increase dividend payments for the first time since the financial crisis, an anxiously awaited set of instructions that could provide a boost to bank stocks. Bank of America Corp. BAC, +0.51% shares rose 1.9% while J.P. Morgan Chase & Co. shares JPM, +0.68% climbed 2.9%. Read more on financial stocks.

“Their ability to make their stock more attractive, particularly to yield-oriented investors who have pretty much fled the banks in the last two years, sends a good message for the market in general,” said Bruce Simon, chief investment officer at Ballentine Partners.

Simon added that his firm believes “the dividend-oriented stocks are the place to be in 2011, particularly with the new Congress and some debate about whether the tax increases that Obama had been planning for may now be off the table. For that reason and also for their general stability in a very uncertain economic environment, we think that this will increase the appeal.” Read story on Canadian high-dividend payers.