(Updates to late afternoon, adds commentary, changes byline)
* Fed to move this year despite weak report-Fed's Rosengren
* Health stock drop as Pacific trade deal disappoints
* GE rallies after Peltz takes near 1 pct stake
* Indexes up: Dow 1.8 pct, S&P 1.8 pct, Nasdaq 1.5 pct
By Sinead Carew
Oct 5 (Reuters) - U.S. stocks rose on Monday, with the S&P 500 up for the fifth day, as investors bet the Federal Reserve will not raise interest rates this year.
Friday's U.S. nonfarm payrolls report for September showed job growth slowed in the last three months, increasing prospects that the era of near-zero interest rates will continue for a while yet.
Low interest rates make it cheaper for companies to borrow and can boost consumer spending.
"It's back to the risk-on trade of bad news is good news. With the jobs number that came out on Friday, the chances of the Fed raising this year have gone down," said J.J. Feldman, portfolio manager at Miracle Mile Advisors in Los Angeles.
The Fed, which has not raised interest rates since June 2006, kept its benchmark rate unchanged in September, citing an uncertain global economic outlook and volatile markets.
Traders are pricing in only a 31-percent chance of a December hike, down from 44 percent before the jobs report, according to CME Group's FedWatch program.
However, Eric Rosengren, head of the Boston Fed, told Reuters on Monday that he still expected the Fed to raise rates this year despite the "weak" jobs report.
At 2:59 p.m., the Dow Jones industrial average rose 297.14 points, or 1.8 percent, to 16,769.51, the S&P 500 gained 35.1 points, or 1.8 percent, to 1,986.46 and the Nasdaq Composite added 70.25 points, or 1.49 percent, to 4,778.03.
All 10 major S&P sectors were up, with the industrial index's 3.1-percent rise leading. Its top driver was GE, up 5.6 percent after Nelson Peltz's Trian Fund Management disclosed a roughly 1 percent stake..
The weakest sector was the S&P health index, up 0.2 percent. The United States and other Pacific Rim countries reached a sweeping trade liberalization deal that fell short of what health industry groups were expecting on patent protection for drugs.
The Nasdaq biotechnology index was down 1.2 percent, breaking a three-day run of gains. The index had fallen for eight sessions before that amid criticism of high drug prices.
Energy stocks jumped 3 percent. U.S. crude oil prices settled up 1.6 percent after Russia said it was prepared to discuss the market with other producers.
With the third-quarter earnings season starting this week, investors are Beginning to factor in what is likely to be the biggest fall in profits for S&P 500 companies in six years. Wall Street expects S&P 500 companies to report a 4.2 percent decline in earnings, according to Thomson Reuters data.
Advancing issues outnumbered declining ones on the NYSE by 2,721 to 348, for a 7.82-to-1 ratio; on the Nasdaq, 2,135 issues rose and 646 fell for a 3.30-to-1 ratio favoring advancers.
The S&P 500 posted 9 new 52-week highs and no new lows; the Nasdaq recorded 40 new highs and 31 lows. (Additional reporting by Abhiram Nandakumar and Tanya Agrawal in Bengaluru; Editing by Ted Kerr and Nick Zieminski)