U.S. stocks climbed on Friday after solid data on the labor market strengthened confidence in the recovery and comments from a Federal Reserve Bank president signaled support for economic stimulus efforts.

The combination of an improving economy and support for the completion of the Fed's second round of quantitative easing, so-called QE2, pushed the S&P 500 through a technical level it has been unable to sustain despite several attempts.

U.S. employment grew solidly for a second month in March and the jobless rate hit a two-year low of 8.8 percent.

New York Fed Bank President William Dudley said it would be a surprise if the U.S. central bank did not complete its $600 billion in bond purchases to help the economy, though the benefits of doing more have fallen.

If they indicated they were going to continue with QE2, then that is a lot of the market, said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania. A lot of good news, a lot of momentum and the Fed is accommodative.

The S&P broke above 1,332, a significant level as it represents double the 12-year low hit in March 2009. If the index stays convincingly above that threshold, it may trigger more buying.

1,333 is really the breakout -- we are making new highs for the bull market for several indices and you will see confirmation from the S&P shortly, said Marc Pado, U.S. market strategist, Cantor Fitzgerald & Co. in San Francisco .

The Dow Jones industrial average <.DJI> gained 80.57 points, or 0.65 percent, to 12,400.30. The Standard & Poor's 500 Index <.SPX> rose 9.76 points, or 0.74 percent, to 1,335.59. The Nasdaq Composite Index <.IXIC> added 17.04 points, or 0.61 percent, to 2,798.11.

The S&P 500 ended the first quarter on Thursday with a gain of 5.4 percent.

NYSE Euronext shares rallied after Nasdaq OMX Group Inc and IntercontinentalExchange Inc unveiled a bid to buy the rival exchanges operator, topping an earlier offer from Deutsche Boerse AG .

NYSE's stock surged 12.8 percent to $39.66 while ICE shares lost 4.1 percent to $118.52 and Nasdaq OMX rose 7.8 percent to $27.85.

In another snapshot of the economy, the U.S. manufacturing sector grew at a marginally slower pace in March, according to the Institute for Supply Management. The Commerce Department said construction spending fell more than expected in February, dropping to its lowest level since October 1999.

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)