* Payrolls top expectations, unemployment hits 5-yr low
* J.C. Penney, Barnes & Noble shares fall on SEC inquiries
* Dow up 1 pct, S&P 500 up 1 pct, Nasdaq up 0.8 pct
By Rodrigo Campos
NEW YORK, Dec 6 (Reuters) - U.S. stocks rose on Friday aftera stronger-than-expected payrolls report gave traders confidencethat the economy could be healthy enough to withstand a scalingback of the Federal Reserve's stimulus.
The jobs-driven rally gave the S&P 500 its best day innearly a month. But the broad index was still on track to postits first negative week in nine after falling in the previousfive sessions.
Nonfarm payrolls added 203,000 in November, exceeding theforecast, and the U.S. unemployment rate fell to a five-year lowof 7.0 percent. The Labor Department's report raised theprospects that the Fed would begin to taper its stimulus programsooner rather than later.
Economic data for the fourth quarter so far has been mixed,with labor market and consumer spending indicators firming whilethe housing market and business spending have slowed.
"The economy is still not generating the levels of inflationthe Fed would like to see, so that may give them a little spaceto maneuver," said Cam Albright, director of asset allocation atWilmington Trust Investment Advisors, in Wilmington, Delaware.
"I don't think (the payrolls data) backs the Fed into thecorner that they have to taper in December."
Many market participants have expected the Fed to announce acut in stimulus in March. The Fed has said it would slow itsmassive bond purchases when certain economic measures meet itstargets, including a drop in the U.S. unemployment rate.
The Dow Jones industrial average rose 153.27 pointsor 0.97 percent, to 15,974.78. The S&P 500 gained 17.16points or 0.96 percent, to 1,802.19. The Nasdaq Composite added 32.40 points or 0.80 percent, to 4,065.57.
After an eight-week run that pushed the S&P 500 up nearly 7percent, the benchmark index had dropped 1.2 percent over thepast five sessions, its longest losing streak since lateSeptember.
Intel ranked among the S&P 500's top points gainers,with its shares up 2.8 percent at $24.94 after Citigroup raisedits rating on the chipmaker's stock to "buy" from "neutral."
J.C. Penney shares fell 6 percent to $8.32 after thedepartment store chain said it received a letter of inquiry fromthe U.S. Securities and Exchange Commission, seeking anexplanation on the company's financial position.
Barnes & Noble also disclosed an SEC investigation,and its stock fell 5.4 percent to $15.50.
Other data showed personal spending rose 0.3 percent inOctober, slightly higher than expected. The ThomsonReuters/University of Michigan's preliminary reading on theoverall index on consumer sentiment jumped to 82.5 for Decemberfrom a final November reading of 75.1.
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