By Saumya Vaishampayan 

U.S. stocks rose Friday while bonds fell after data showed a strong pace of job creation in November, but didn't significantly alter investor expectations for a Federal Reserve rate increase in the second half of next year.

The dollar jumped to fresh highs against the euro and the yen, underscoring traders' expectations that the Federal Reserve will raise short-term interest rates in 2015, even as the Bank of Japan is ramping up its easing steps and the European Central Bank is expected to soon take its own new stimulus measures.

The Labor Department reported that nonfarm payrolls rose a seasonally adjusted 321,000 last month, the strongest month of hiring since January 2012. Economists surveyed by The Wall Street Journal expected the creation of 230,000 jobs in November.

The Dow Jones Industrial Average gained 41 points, or 0.2%, to 17941. The blue-chip index hit a fresh intraday record in early trade.

The S&P 500 added four points, or 0.2%, to 2076. The Nasdaq Composite Index rose 14 points, or 0.3%, to 4783.

The jobs report reinforced the case for stocks going higher, said Kate Warne, investment strategist at Edward Jones. "More jobs means more consumer spending," she said. "That means better overall growth and earnings, which is good news for stocks."

At the same time, the report isn't enough to prompt the Fed to raise rates sooner than expected, said Ms. Warne. Fed officials "are very tolerant of better-than-expected jobs growth because that's what they've been waiting to see," she said.

Many investors say the backdrop for stocks remains positive. Stocks have hit a series of records in recent weeks as data have confirmed the U.S. economy and corporate earnings are both growing. In fact, the U.S. is on track to post its strongest year of job growth since 1999. Easing efforts by major central banks will maintain pressure on already-low global interest rates, making stocks appear more attractive than other assets.

Stocks can continue to gain even when the Fed begins to raise short-term interest rates, partly because the increases are expected to be gradual, said Jack Caffrey, portfolio manager at J.P. Morgan Private Bank. A pullback in stocks would come if inflation starts to pick up to a point that concerns the Fed, resulting in bigger interest-rate increases, he said.

The dollar rose versus the yen, recently trading at Yen121.33 versus Yen120.49 ahead of the jobs data. It hit a new seven-year high in the wake of the report. The euro fell to a fresh two-year low against the dollar, recently fetching $1.2292 versus $1.2368 before the report.

Bets that the Fed will raise rates at its Sept. 2015 policy meeting rose only slightly to 58% after the strong November jobs report, from 56.9% Thursday, based on pricing for federal funds rate futures from the CME Group. Odds for a June move ticked up to 23% from 22.3%.

Still, elsewhere in the bond market prices fell as the affirmation of steady economic growth in the U.S. sapped investors' appetite for U.S. Treasurys.

Short-dated Treasurys led the selloff. Debt with shorter maturities is more vulnerable to shifts in expectations about interest rates. The yield on the two-year note rose to 0.6274%.

"If we have two or three more strong jobs reports like this, it increases the chance that the Fed would raise interest rates sooner than many have thought," said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading in New York at Deutsche Bank AG's private wealth management unit.

The benchmark 10-year note yield rose to 2.304%. Before the report was released, the note was yielding 2.26%. When bond yields rise, prices fall.

Gold, another traditional safe haven, also fell after the jobs report. Gold futures declined 1% to $1,195.50 an ounce.

In other commodity markets, crude-oil futures fell 1.4% to $65.86 a barrel.

Stocks and bonds climbed in Europe, with the Stoxx Europe 600 up 1.6%.

In corporate news, Dollar Tree Inc. said its pending $8.5 billion acquisition of Family Dollar Stores Inc. could close as early as February. Dollar Tree said it would have to shed a small number of stores for antitrust approval of the deal. Shares of Dollar Tree rose 0.4%, while those of Family Dollar were little changed.

Amazon.com Inc. is getting into the diaper business in a move that pits itself against Procter & Gamble Co. Amazon will sell diapers and wipes through a brand called Elements and the company plans to eventually expand into other household products. Amazon shares fell 1.3% and Procter & Gamble shares lost 0.9%.

Shares of Google Inc. fell 1.5%. Bank of America Merrill Lynch cut the company to a neutral rating from buy.

Min Zeng contributed to this article.

Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com

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