U.S. stocks rose on Monday, pushing the Dow up near the 11,000 level, as signs of a turnaround in the U.S. labor market bolstered hopes the economy is strengthening and the profit outlook is brightening.

Shares of natural resources companies led the gains on expectations that an improving economy would drive up demand.

U.S. front-month crude oil futures topped $86 a barrel and gave a big lift to energy shares, with Exxon Mobil Corp up almost 1 percent and Chevron Corp up 1.3 percent.

The S&P energy index <.GSPE> gained 1.6 percent, while the S&P materials index <.GSPM> added 1.2 percent.

On the first trading day after government data showed the economy added the largest number of jobs in three years, investors got separate reports showing that services -- the U.S. economy's largest segment -- grew above expectations in March and pending home sales rose more than expected in February.

The Dow Jones industrial average and the benchmark Standard & Poor's 500 Index both finished at fresh 18-month closing highs. The Nasdaq ended at a 19-month closing high.

The data is favorable. It kind of reaffirms what stock investors have been thinking all along, said Steve Goldman, market strategist at Weeden & Co, a brokerage in Greenwich, Connecticut. The economy is chugging along. First, it was inventory rebuilding. Now the consumer is gaining more confidence.

Standouts included consumer discretionaries and technology shares. Apple Inc shares rose 1.1 percent to $238.49 -- a lifetime closing high -- after initial sales of its hotly anticipated iPad portable computer surpassed some forecasts when it debuted on Saturday.

The Dow Jones industrial average <.DJI> gained 46.48 points, or 0.43 percent, to end at 10,973.55. The Standard & Poor's 500 Index <.SPX> rose 9.34 points, or 0.79 percent, to finish at 1,187.44. The Nasdaq Composite Index <.IXIC> shot up 26.95 points, or 1.12 percent, to 2,429.53.

The S&P 500 is now up 75.5 percent from its bottom in early March 2009.

ENERGY, CHIPS AND BUILDERS RALLY

Volume was extremely light, making Monday's session the second-slowest volume day of 2010.

Traders said rising bond yields and resurgent crude oil prices might give the market some headwinds.

The yield on the benchmark U.S. 10-year Treasury note rose to touch 4 percent earlier, a level not seen since June 2009, when it hit 4.01 percent, according to Reuters data.

Higher inflation could choke off some of the recovery, said Michael James, a senior trader at regional investment bank Wedbush Morgan in Los Angeles. There's certainly higher inflation, with bond yields being back at 4 percent.

On the New York Mercantile Exchange, May U.S. crude rose $1.75, or 2.06 percent, to settle at $86.62 a barrel, the highest close since the October 8, 2008, settlement of $88.95.

Exxon Mobil closed at $68.19, up 0.9 percent, while Chevron ended at $77.66, up 1.3 percent.

Aside from energy, semiconductor shares were another standout, with the semiconductor index <.SOXX> up 3 percent.

Cree Inc jumped 10 percent to $77.63 on Nasdaq after UBS raised its rating on the stock to buy. Global semiconductor sales rose 56 percent in February from a year ago, according to an industry report.

The February home sales data lifted home builders' stocks, with the PHLX housing index <.HGX> up 1.8 percent. The index was buoyed by shares of PulteGroup Inc

, up 2.9 percent at $11.44, and Masco Corp , up 2.2 percent at $16.15.

Apple provided the top boost to the Nasdaq after saying it sold more than 300,000 iPads on the first day, and there were more than 1 million downloads from its online store.

GOING HOG WILD

Shares of Harley-Davidson Inc roared to $31.65, their highest level in almost 2-1/2 years after an analyst raised his price target for the motorcycle maker's stock. Harley's stock shot up 10.5 percent to close at $31.37.

The Institute for Supply Management said its services index jumped to 55.4 in March, its strongest reading since May 2006, and well above February's reading of 53.0. The National Association of Realtors monthly index of pending sales of existing U.S. homes shot up 8.2 percent in February, when a flat reading was expected.

Nonfarm payrolls gained 162,000 jobs in March, Friday's report showed. That was below consensus, and many of the jobs were temporary, but more private-sector hiring was seen as further evidence the economy is on the mend.

Last week, the main U.S. stock indexes closed their fifth straight week of gains and fourth straight positive quarter. The U.S. stock market was closed on Friday for the Good Friday holiday.

About 7.04 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's estimated daily average of 9.65 billion.

Advancing stocks beat decliners by a ratio of about 3 to 1 on both the NYSE and Nasdaq.

(Reporting by Ellis Mnyandu; Editing by Jan Paschal)