* October payrolls well above expectations
* Prices for U.S. Treasuries slump as payrolls jump
* Twitter falls more than 7 percent in second day of trading
* Indexes up: Dow 1.1 pct, S&P 1.3 pct, Nasdaq 1.6 pct
By Angela Moon
NEW YORK, Nov 8 (Reuters) - U.S. stocks rose on Friday,rebounding from the previous session's selloff, after anunexpectedly strong payrolls report lent weight to views theworld's largest economy is stronger than previously thought.
With Friday's advance, The Dow and S&P 500 recorded theirfifth straight week of gains. For the week, the Dow rose 0.9percent and the S&P 500 index rose 0.5 percent. The Nasdaq fell0.1 percent for the week.
"The focus has been heavily on whether the economy is seeingsome growth, and while the initial reaction to the jobs reportwas about the Fed tapering or tightening policy, people areseeing the positive aspect of growth," said Rick Meckler,president of investment firm LibertyView Capital Management inJersey City, New Jersey.
"Another reason why the market is moving higher is... a lackof alternatives. As much as investors want to take profits,considering how far this market has come, the short-term ratesremain low and there is a risk of putting money into fixedincome."
The strong jobs report - 204,000 new jobs were created lastmonth, much more than the expected 125,000 - came before themarket open and initially pressured futures because it increasedchances the Federal Reserve could begin to scale back itsstimulus before the end of the year.
The strong data also sent U.S. Treasuries prices lower,lifting the benchmark 10-year yield to its highestin more than three weeks. A four-month rally in yields earlierthis year pressured stocks, but the recent strong data has easedconcerns over higher borrowing costs.
"Most people in the market believe in the next couple yearsthe 10-year yield will return to a 3-to-4 percent level, and amarket trading at 17 times earnings is cheap still, in thatenvironment," said Eric Kuby, chief investment officer at NorthStar Investment Management Corp in Chicago.
The most recent trailing price-to-earnings ratio on the S&P500 is 16.2 according to Thomson Reuters data, with the forwardP/E at 14.8.
The Dow Jones industrial average was up 167.80points, or 1.08 percent, at 15,761.78. The Standard & Poor's 500Index was up 23.46 points, or 1.34 percent, at 1,770.61.The Nasdaq Composite Index was up 61.90 points, or 1.60percent, at 3,919.23.
Financial stocks led the charge on the S&P 500 witha 2.3 percent advance, following a more than 1 percent drop inthe sector on Thursday, on the expectation that higher rateswill translate into stronger earnings.
JPMorgan Chase added 4.5 percent to $53.96 whileBank of America and Citigroup both ended up morethan 3 percent.
On the other hand, homebuilders, seen getting hurt ifmortgage rates rise sharply, were lower. Shares of Lennar and Ryland Group fell more than 4 percent each.
Apparel retailer Gap's shares led percentage gainson the S&P 500 with a near 10 percent advance a day after itposted October same-store sales well ahead of estimates.
Santarus Inc surged 37.6 percent to $31.95 afterSalix Pharmaceuticals Ltd agreed to buy the drugmakerfor about $2.6 billion. Salix shares jumped 17.8 percent to$84.00.
Twitter shares fell 7.2 percent to $41.65 a dayafter its NYSE debut. Shares had rallied 72.7 percent Thursday,though they closed slightly below the opening print of $45.10.
Other economic data showed consumer spending rose 0.2percent after advancing 0.3 percent in August, in line withexpectations.
The Thomson Reuters/University of Michigan's preliminaryreading on consumer sentiment fell to 72.0 in November, itslowest since December 2011 and below both October's finalreading of 73.2 and the 74.5 forecast.
About 6.1 billion shares of NYSE-listed securities, AMEX andregional exchange-listed securities and Nasdaq-listed securitiestraded on Wednesday, according to data by Bats Global Markets.