*

US job growth surges in Sept; unemployment rate falls to

4.1%

*

Spirit Airlines ( SAVE ) tanks after report of bankruptcy filing

*

Energy sector climbs for the week with Middle East

tensions up

(Updates to 4 p.m. ET/2000 GMT)

By Caroline Valetkevitch

NEW YORK, Oct 4 (Reuters) -

U.S. stocks closed solidly higher on Friday as a

stronger-than-expected 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 outperformed, with the Russell 2000 index

gaining. The S&P 500 financials index also rose.

According to preliminary data, the S&P 500

gained 50.59 points, or 0.89%, to end at 5,750.53 points,

while the Nasdaq Composite gained 216.85 points, or

1.21%, to 18,135.33. The Dow Jones Industrial Average

rose 331.40 points, or 0.79%, to 42,342.99.

The S&P energy index was up again following oil

prices higher. With tensions in the Middle East escalating, the

index was also up sharply for the week.

U.S. President Joe Biden said that if he were in Israel's

shoes, he would think about alternatives to striking Iranian oil

fields, adding he thinks Israel has not yet concluded how to

respond to Iran's missile barrage this week.

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

clearing the cargo backlog will likely take time.

Spirit Airlines ( SAVE ) shares dropped while other airlines

jumped after a report showed Spirit was in talks with

bondholders about a potential bankruptcy filing. Frontier Group ( ULCC )

, United Airlines and American Airlines ( AAL )

all rose sharply.

Rivian shares fell 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. The season kicks off, with bullish

investors hoping results will justify increasingly rich

valuations in the stock market.

(Additional reporting by Johann M Cherian and Purvi Agarwal in

Bengaluru; Editing by Pooja Desai and David Gregorio)