The Labor Department said the U.S. economy added 163,000 jobs in July, more than the 100,000 jobs economist predicted.
However, economists also predicted the unemployment rate would remain unchanged. Instead, it rose from 8.2 percent to 8.3 percent as more job seekers entered the workforce.
In late afternoon trading, the Dow Jones industrial average added 217.19 points -- 1.69 percent -- and closed at 13,096.17.
The tech-heavy Nasdaq composite index added 58.13 points (2 percent) to 2,967.9.
The Standard and Poor's 500 index gained 25.99 points (1.90 percent) to 1,390.99.
On the New York Stock Exchange, the total listed volume was 3.56 billion shares.
The benchmark 10-year treasury note yielded 1.571 percent.
The euro was $1.2376 from $1.2182 Thursday. Against the yen, the dollar was 78.56 from 78.22 yen Thursday.
In Tokyo, the Nikkei 225 index shed 1.13 percent, 98.07 points, to 8,555.11.
In London, the FTSE 100 rose 2.21 percent, 124.98 points, to 5,787.28.
2014: The Year in Music [PHOTOS]