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US job growth surges in Sept; unemployment rate falls to

4.1%

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Spirit Airlines ( SAVE ) tanks after report of bankruptcy filing

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Energy sector set for biggest weekly jump in two years

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Indexes up: Dow 0.3%, S&P 500 0.4%, Nasdaq 0.7%

(Updates to 2:20 p.m. ET/1820 GMT)

By Caroline Valetkevitch

NEW YORK, Oct 4 (Reuters) -

The major U.S. stock indexes were higher on Friday afternoon

as a stronger-than-expected U.S. jobs report reassured investors

who had worried the economy may be getting too weak.

U.S. job gains increased

in September by the most in six months, and the

unemployment rate fell to 4.1%, the report showed.

Traders further reduced bets on a 50-basis-point

reduction at the Federal Reserve's Nov. 6-7 meeting. Traders are

now pricing in just an 8% chance of a 50-bps rate cut, down from

around 31% earlier on Friday, the CME Group's FedWatch Tool

showed.

The data "basically tells us economic activity in the

fourth quarter is likely to remain at a solid pace," said Peter

Cardillo, chief market economist at Spartan Capital Securities

in New York.

"It's a good surprise, but I also think it may now slow

the pace of rate cuts."

The Fed kicked off a monetary easing cycle last month by

cutting rates 50 bps.

Small caps were outperforming, with the Russell 2000

index up 1.1%, and the S&P 500 financials index

also was up 1.1%.

The Dow Jones Industrial Average rose 133.68

points, or 0.32%, to 42,145.27, the S&P 500 gained 24.02

points, or 0.42%, to 5,723.96 and the Nasdaq Composite

gained 126.26 points, or 0.70%, to 18,044.73.

The S&P energy index was up 1% for the day,

following

oil prices

higher. With tensions in the Middle East escalating, the

index was up 6.8% so far for the week, on track for its biggest

weekly percentage gain since October 2022.

U.S. ports on the East and Gulf coasts reopened, but

clearing the cargo backlog will likely take time.

Among stocks, Spirit Airlines ( SAVE ) dropped 27% after a

report showed the carrier was in talks with bondholders about a

potential bankruptcy filing.

Rivian shares fell 5% after the electric vehicle

startup cut its full-year production forecast and delivered

fewer vehicles than expected in the third quarter.

Third-quarter earnings for S&P 500 companies are expected to

unofficially begin next week.

Advancing issues outnumbered decliners by a 1.52-to-1 ratio

on the NYSE. There were 224 new highs and 25 new lows on the

NYSE.

On the Nasdaq, 2,724 stocks rose and 1,383 fell as

advancing issues outnumbered decliners by a 1.97-to-1 ratio.

(Additional reporting by Johann M Cherian and Purvi Agarwal in

Bengaluru; Editing by Pooja Desai and David Gregorio)