NEW YORK ? Wall Street heads into the final stretch of 2009 with fresh confidence that the worst of the economic crisis is over, setting up a positive environment for the market heading into 2010.

The main US stock indexes notched gains in the week to Friday, buoyed by data showing a sharp turnaround in the job market that offered hopes for a sustained recovery from recession.

The market extended the powerful rally that began in March, with the Dow Jones Industrial Average gaining 0.76 percent for the week to 10,388.22.

The tech-dominant Nasdaq composite jumped 2.61 percent to 2,194.35 while the Standard & Poor's 500 broad-market climbed 1.33 percent on the week to 1,105.98.

With a rally of more than 60 percent from the lows in March, the Dow has risen 18.37 percent for 2009, while the Nasdaq is up 39.14 percent and the S&P 500 index 22.44 percent.

The market was reassured by Friday's data showing a dramatic turnaround in the US labor market. The November data showed job losses narrowed to 11,000 from 111,000 in October, and the unemployment rate dipped to 10 percent from 10.2 percent.

The report "is the most important piece of incrementally positive news regarding the economic recovery seen to date," said Fred Dickson at DA Davidson & Co., adding that it "should lift consumer and investor confidence on Main Street."

The November employment report "should reduce some of the pervasive fear factor currently held by huge numbers of individual investors," he said.

"Any way you slice this, it is a good number for the US economy and its growth initiative," added Kevin Giddis at Morgan Keegan.

"Caution is still the better path and we are a long way from standing on our own, but today's number suggests that the economy is on a trend line to growth."

Peter Lucas, investment strategist at RBC Wealth Management, said many investors have been underestimating the strength of the recovery in the US and global economies, and some caution has been added to the equation by Dubai's debt problems.

"I continue to feel that the consensus is underestimating the recovery potential of the global economy, particularly given that companies have yet to rebuild their inventories in earnest and a good deal of the US fiscal measures [tax cuts and increased government spending] has yet to hit the streets," he said.

"Furthermore, US companies in particular have been very successful in curtailing costs and the immediate outlook for corporate profits is therefore pretty bright."

Douglas McIntyre at 24/7 Wall Street said it is not unrealistic to think of the Dow index hitting 12,000, with the market still well below its 2007 peaks.

"The Dow moved from 10,600 to 12,800 between July 2006 and February 2007," he said.

"There was not an extraordinary recovery going on in the economy then. There could be one happening now. Any strong evidence to support impressive [economic] growth predictions sends the market on its last big leg up in 2010."

Bonds took a beating from signs of a stronger economy that may prompt the Federal Reserve to hike interest rates sooner than expected.

The yield on the 10-year Treasury bond rose sharply to 3.483 percent from 3.211 percent a week earlier and that on the 30-year bond climbed to 4.413 percent from 4.209 percent. Bond yields and prices move in opposite directions.

In the coming week, market-moving news may come from Tuesday's report on the US balance of trade and, more significantly, Friday's retail sales data from November, which will provide clues on consumer spending heading into the holiday season.