* Stronger-than-expected U.S. job growth in May
* Unemployment rate hits 18-yr low
* U.S. Treasury yields at session peaks after data
* Tech stocks biggest gainer on S&P 500
* Indexes up: Dow 0.76 pct, S&P 0.90 pct, Nasdaq 1.27 pct (Changes comment, adds details, updates prices)
By Medha Singh
June 1 (Reuters) - U.S. stocks rose on Friday after the latest monthly jobs data indicated strength in the world's largest economy and cemented expectations of at least two more rate hikes by the Federal Reserve this year.
Technology stocks led the rally, with gains in behemoths such as Apple, Microsoft and Alphabet lifting the S&P tech index to a record high.
Government data showed the U.S. economy added 223,000 jobs in May, while the average hourly earnings rose 0.3 percent after edging up 0.1 percent in April both topping estimates.
Economists polled by Reuters had forecast an increase of 188,000 jobs and a 0.2 percent rise in wages.
The data showed a drop in the unemployment rate to an 18-year low of 3.8 percent, pointing to rapidly tightening labor market conditions.
"It's a good report all around. It literally checks off all the right boxes," said Tom Porcelli, chief U.S. economist, RBC Capital Markets, New York.
"The Fed didn't need a report nearly this strong for them to have continued on course, a report like this is sort of icing on the cake."
Bets by traders in short-term interest-rate futures showed that the Fed is increasingly likely to raise rates a fourth time this year.
The benchmark U.S. Treasury yield climbed to the session peaks of 2.926 percent. U.S. two-year yield also touched the day's peak of 2.488 percent.
Prospects of interest rate hikes lifted the S&P financial index 1.3 percent, with shares of big U.S. banks gaining between 0.9 percent and 1.4 percent.
Markets got a reprieve overnight as Italy's anti-establishment parties revived coalition plans, removing the risk of a repeat vote dominated by debate over the country's future in the euro zone.
However, investors are keeping an eye out on developments around trade after Washington on Thursday imposed steel and aluminum tariffs on imports from Canada, Mexico and the European Union.
Canada and Mexico retaliated, targeting U.S. products such as whiskey, orange juice, steel, aluminum and others.
At 11:31 a.m. EDT the Dow Jones Industrial Average was up 184.93 points, or 0.76 percent, at 24,600.77, the S&P 500 was up 24.39 points, or 0.90 percent, at 2,729.66 and the Nasdaq Composite was up 94.54 points, or 1.27 percent, at 7,536.66.
Nine of the 11 major S&P indexes were higher. The Nasdaq was also inching toward a record level. A strong tech rally has largely cushioned the index from deep losses in the past week.
"Tech isn't in the headlines as groups that are going to be impacted by what's going on with regards to tariffs in the EU, whereas others are," said Daniel Morgan, portfolio manager at Synovus Trust in Atlanta which holds shares in the so-called FAANG stocks.
"That's another reason on top of the strong earnings growth in the sector."
Advancing issues outnumbered decliners by a 2.48-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 2.33-to-1 ratio on the Nasdaq.
The S&P index recorded 16 new 52-week highs and six new lows, while the Nasdaq recorded 123 new highs and 18 new lows. (Reporting by Medha Singh in Bengaluru, additional reporting by Karen Brettell in New York; Editing by Arun Koyyur)