Equities reacted favorably to much stronger than expected employment figures Friday although concerns about widening conflict in the Middle East limited the gains. The Dow Jones industrial average rose 0.8 percent, the S&P 500 gained 0.9 percent and the Nasdaq was up 1.2 percent. Bond yields, the dollar and oil prices rose.

Investors regarded good news for the economy as good news for stocks despite the tendency for good news to boost bond yields and diminish the need for big Federal Reserve rate cuts. Friday's strong results bolstered expectations for ongoing growth and left intact the expectation for a modest 25 basis point rate cut at the November Fed policy meeting rather than the 50 basis points many hoped for before the recent run of relatively strong economic reports. Chicago Fed President Austan Goolsbee told Bloomberg the latest jobs report did not necessarily alter the Fed's thinking.

Investor sentiment continues to be undercut by rising oil prices and concern about disruptions flowing from escalating conflict between Israel and its enemies in the Mideast. At the same time, investors appeared keen to look for bargains after stock losses in many sectors this week. Energy stocks were among the day's best performers, as they have been much of the week.

Megacaps had a good day to underpin the major averages amid dip-buying. Other sectors outperforming included materials, consumer discretionary, financials and communications services. Lagging were defensive sectors including consumer staples, real estate, utilities and health care.

Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.

Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.