News of hiring surge sends bond yields higher as traders anticipate rate increase; stocks gain

A strong jobs report knocked down U.S. government bonds early Friday, sending yields higher, as traders bet that the Federal Reserve would raise interest rates later this year. Stocks edged higher, recovering from an early slump.

In Europe, markets were rattled by Greece's decision to bundle together its upcoming payments to the International Monetary Fund. That heightened concerns that the country could default on its debts and drop the euro.

KEEPING SCORE: The Dow Jones industrial average rose 32 points, or 0.2 percent, to 17,933 as of 10:40 a.m. Eastern time. The Standard & Poor's 500 index increased five points, or 0.2 percent, to 2,100. The Nasdaq composite climbed 12 points, or 0.3 percent, to 5,071.

JOBS: U.S. employers added 280,000 workers to their payrolls in May, the government reported. The unemployment rate inched up to 5.5 percent from 5.4 percent in April, a result of more people returning to the workforce in search of a job. The government also tweaked its estimate of hiring in March and April, raising hiring numbers for the two months by a combined 32,000.

RATES: Traders dropped U.S. government bonds when the report came out, driving yields up. The benchmark 10-year Treasury note bounced to 2.38 percent from 2.31 percent late Thursday, and the dollar jumped against other major currencies.

RESPONSE: "Today's report clears the Fed for liftoff," said Christopher Rupkey, chief financial economist at MUFG Union Bank, in a note to clients. "Rate hikes this summer. Bet on it."

GREEK TURMOIL: The Greek government's decision late Thursday to bundle four debt payments totaling 1.6 billion euros ($1.8 billion) due to the International Monetary Fund stoked fears about the country's finances. It's the first time a developed country has taken the option of rolling debt payments together, an emergency move last taken up last by Zambia in the 1980s. Greece's prime minister, Alexis Tsipras, is scheduled to address parliament Friday as discontent rises within his party.

EUROPE: Greece's stock market led the way lower with the benchmark Athens index down 5 percent. Elsewhere, France's CAC 40 slid 1.1 percent, while Germany's DAX fell 0.9 percent. Britain's FTSE 100 fell 0.6 percent.

ASIA'S DAY: Japan's Nikkei 225 fell 0.1 percent, and South Korea's Kospi fell 0.2 percent. In China, Hong Kong's Hang Seng dropped 1.1 percent, and the Shanghai Composite Index gained 1.5 percent.

OIL: Benchmark U.S. crude fell 23 cents to $57.76 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oil, lost 37 cents, $61.67 a barrel in London.