* Mega-cap stocks jump; energy and materials leading S&P * U.S. job growth far below expectations in April * Indexes up: Dow 0.49%, S&P 0.58%, Nasdaq 0.64% (Updates to early afternoon) May 7 (Reuters) - The S&P 500 and the Dow hit record highs on Friday, while the Nasdaq recovered along with heavily weighted growth stocks as U.S. jobs data eased concerns over prospects for rising rates. U.S. job growth unexpectedly slowed in April, likely restrained by shortages of workers, the Labor Department report showed. The report alleviated some concerns about rising inflation and potentially higher U.S. interest rates, which some investors worry would hurt growth companies with high valuations. “The anticipation and confirmation of (Federal Reserve) policy staying the same and continued economic recovery with vaccines rollout have fueled these all-time highs, but we do believe the volatility is going to be tightened in the short term,” said Greg Bassuk, chief executive at Axs Investments. Heavily-weighted growth stocks such as Microsoft Corp , Apple Inc and Alphabet all rose. The Dow Jones Industrial Average rose 168.97 points, or 0.49%, to 34,717.5 and the S&P 500 gained 24.47 points, or 0.58%, to 4,226.09. Both were on track for their best week since March. The Nasdaq Composite added 87.49 points, or 0.64%, to 13,720.33, but was still set for a weekly decline. Payments firm Square Inc rose 3.7% after reporting a better-than-expected quarterly profit, as surging demand for bitcoin fueled a jump in cryptocurrency transactions on its application. Streaming device maker Roku Inc jumped 11.4% following upbeat revenue outlook, while fitness equipment maker Peloton Interactive gained 6.1% as it laid out steps to improve the safety of the equipment. Expedia Group Inc shares rose 6.8% as analysts raised price target on hopes that it would continue to benefit from the recovery in the travel industry. Advancing issues outnumbered declining ones on the NYSE by a 2.98-to-1 ratio; on Nasdaq, a 1.84-to-1 ratio favored advancers. The S&P 500 posted 147 new 52-week highs and one new low; the Nasdaq Composite recorded 132 new highs and 48 new lows. (Reporting by Krystal Hu in New York; additional reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru; Editing by Maju Samuel) Our Standards: The Thomson Reuters Trust Principles.