(For a Reuters live blog on U.S., UK and European stock

markets, click or type LIVE/ in a news window.)

*

US job growth surges in Sept; unemployment rate falls to

4.1%

*

Spirit Airlines ( SAVE ) tanks after report of bankruptcy filing

*

Rivian slips after slashing full-year production forecast

*

Energy sector poised for biggest weekly jump in two years

*

Indexes up: Dow 0.62%, S&P 500 0.71%, Nasdaq 1.11%

(Updated at 09:46 a.m. ET/1346 GMT)

By Johann M Cherian and Purvi Agarwal

Oct 4 (Reuters) -

U.S. stocks surged on Friday, with the S&P 500 near a record

high as investors cheered a crucial labor report which allayed

concerns of a weakening jobs market and bet on a smaller

interest-rate cut by the Federal Reserve at its next meeting.

A

Labor Department report

showed job growth accelerated in September and unemployment

had slipped to 4.1%, further diminishing the need for the

Federal Reserve to maintain large interest-rate cuts at its two

remaining meetings this year.

Traders raised their bets on a 25-basis-point reduction

at the Fed's November meeting to 94.5%, up from more than 71%

before the data was out, according to the CME Group's FedWatch

Tool.

"For the economy, it means that a soft landing is happening.

We continue to add jobs at a rapid clip and the unemployment

rate continues to tick down," said Ross Mayfield, investment

strategist at Baird.

"It means the Fed is unlikely to cut (by) 50 basis points in

November or December, certainly, and maybe even take a pause in

November."

The Dow Jones Industrial Average rose 258.48

points, or 0.62%, to 42,270.70, the S&P 500 gained 40.75

points, or 0.71%, to 5,740.47 and the Nasdaq Composite

gained 198.25 points, or 1.11%, to 18,116.72.

The small-cap Russell 2000 index jumped 1.6%.

Nine of the 11 S&P 500 sectors trended higher, with

Consumer Discretionary leading with a 1.7% rise.

The yield on two-year Treasury notes rose to

3.857% after the data's release.

Rate-sensitive growth stocks such as Tesla

added 3.6%, Amazon.com ( AMZN ) climbed 2.8% and AI-chip giant

Nvidia ( NVDA ) rose 0.8%, lifting the Philadelphia SE

Semiconductor index 2%.

Big banks also climbed, with JPMorgan Chase & Co ( JPM )

adding 2.2% and Morgan Stanley ( MS ) gaining 2.6%, sending the

broader Banks index up 2.2%.

The labor market has been under greater scrutiny after the

U.S. central bank slashed interest rates in September by a rare

50 basis points to stave off further weakening in employment.

Wall Street's main indexes were set to end October's first

week flat to slightly lower, as investors remained jittery about

a potential escalation in Middle East hostilities, as well as

the workers' strike earlier this week.

Energy stocks such as Exxon Mobil ( XOM ) and SLB

climbed 0.6% each and Chevron ( CVX ) crept up 0.3% as crude

prices surged on worries of supply disruptions in the Middle

East due to the widening conflict in the region.

The S&P 500 Energy sector is on track to log its

biggest weekly jump in two years if gains hold.

Meanwhile, ports on the East and Gulf Coasts began reopening

late on Thursday after workers reached a wage deal, but clearing

the cargo backlog will likely take time. U.S. shares of Zim

Integrated Shipping Services were down 12.5%.

Among others, Spirit Airlines ( SAVE ) nosedived 30% after a

report showed the carrier was in talks with bondholders about a

potential bankruptcy filing after its failed merger with JetBlue

Airways ( JBLU ).

Rivian shed 4.3% after the EV startup cut its

full-year production forecast and delivered fewer vehicles than

expected in the third quarter.

Advancing issues outnumbered decliners by a 2.29-to-1

ratio on the NYSE, and by a 3.35-to-1 ratio on the Nasdaq.

The S&P 500 posted 26 new 52-week highs and one new low,

while the Nasdaq Composite recorded 57 new highs and 28 new

lows.