NEW YORK (TheStreet) -- U.S. stocks soared Friday, driven by a jobs report that reassured investors the economy is on track to grow.

A consensus-topping services sector report provided an extra boost to stocks as the benchmark indices wiped out the week's losses. Inaction by the the Federal Reserve and European Central Bank earlier in the week cast a pall on the markets.

The Dow Jones Industrial Average jumped 217 points, or 1.7%, to 13,096, helping to eke out a 0.2% gain for the week. The blue-chip index, which began the session up 7% year to date, rose to a three-month high Friday, peaking at 13,133 intraday.

Among the 30 Dow components, 27 advanced, led by Kraft Foods ( KFT), Procter & Gamble ( PG), Cisco Systems ( CSCO), Hewlett-Packard ( HPQ) and Bank of America ( BAC).

Kraft was the biggest percentage gainer on the Dow, popping 4%, after reporting Thursday that second-quarter profit was 68 cents a share, surpassing the Wall Street target by 2 cents.

The food company is in the process of splitting its snacks and grocery businesses into two independent companies.

P&G shares finished up 3.1% after the consumer products giant reported a 45% increase in fiscal fourth-quarter net income, helped by the sale of its snacks division. Excluding special items, earnings came in at 82 cents a share, exceeding analysts' estimates of 77 cents a share.

Revenue fell by 1% to $20.21 billion, missing the Wall Street target of $20.26 billion by a bit, amid higher commodity costs and a stronger dollar.

The company also revealed a $4 billion share buyback program for this year.

The S&P 500 closed up 26 points, or 1.9%, to 1,391. It increased 0.4% for the week.

All 10 S&P 500 large-cap sectors gained Friday. Energy, financials, conglomerates and consumer cyclicals were the strongest sectors.

The Nasdaq advanced 58 points, or 2%, at 2,968. The index finished 0.3% higher for the week.

Winners outpaced losers by a ratio of 5-to-1 on the New York Stock Exchange and 3-to-1 on the Nasdaq Friday.

The Labor Department said Friday that nonfarm payrolls rose by 163,000 in July, better than the 100,000 expected by economists in a Reuters survey, as manufacturing jobs and temporary hiring continued to pick up.

This was the biggest monthly jobs gain since February.

The increase "will ease fears that the U.S. economy is following Europe into recession and, if this proves to be the start of a run of stronger data, could yet convince the Fed that it might not need to provide more monetary stimulus after all," said Paul Ashworth, chief U.S. economist at Capital Economics.

The June nonfarm payrolls number was downwardly revised to 64,000.

Average hourly earnings for all employees on private nonfarm payrolls edged up by 2 cents to $23.52.

The unemployment rate in July rose to 8.3% amid a fall in the employment measure found in the household survey of the employment situation report that is used to calculate the unemployment rate.

"The household survey measure of employment is much more volatile, however, and it isn't too surprising to see some payback after a 422,000 jump back in May," Ashworth noted.

Also on Friday, the Institute for Supply Management's July non-manufacturing index registered 52.6 in July, 0.5 point higher than June's 52.1. The July read was a touch higher than the expected 52. Eleven non-manufacturing industries reported growth in July.

September crude oil futures settled up $4.27 at $91.40 a barrel. December gold futures settled up $18.60 at $1,609.30 an ounce.

The benchmark 10-year Treasury was falling 27/32, raising the yield to 1.572%. The greenback was plunging 1.2%, according to the dollar index.

The FTSE in London settled ahead by 2.21% and the DAX in Germany finished higher by 3.93%.

U.S. stocks slid Thursday for a fourth straight session after European Central Bank President Mario Draghi said little about helping struggling nations a day after the Federal Reserve failed to deliver support to the U.S. economy.

A surprising decline in U.S. factory orders also put a damper on sentiment.

On the corporate front, Blue Nile ( NILE) shares Friday skyrocketed 35% after the diamonds and jewelry retailer predicted third-quarter sales that beat Wall Street targets.

OpenTable ( OPEN) shares surged 16% after the online restaurant reservation services provider posted better-than-expected second-quarter results.

Zipcar ( ZIP) shares plummeted after the car-sharing company posted Thursday after the markets close lower-than-expected revenue and weak guidance on third quarter sales.

Shares tumbled 37%.

LinkedIn ( LNKD), the social networker, met Wall Street earnings expectations for its second quarter, but beat on the top line. Shares jumped 16%.

LinkedIn reported Thursday second-quarter earnings of 16 cents a share on revenue of $228.2 million. Analysts were expecting profit of 16 cents a share on revenue of $216.28 million.

LinkedIn said it expects third-quarter sales of $235 million to $240 million. Analysts expect $236.1 million.

Toyota ( TM) on Friday posted profit for the April-June quarter of 290.3 billion yen ($3.7 billion), up from 1.1 billion yen a year earlier, and the automaker raised its sales target for the year. Shares popped 5.2%.

Toyota said it expects sales in 2012 of 9.76 million vehicles, up from 7.95 million vehicles sold in 2011.

SAP ( SAP) agreed to pay Oracle ( ORCL) $306 million in damages over copyright infringement allegations.

SAP shares closed up 4.3% and Oracle shares rose 2.7%.

Oracle won a trial on the same issues two years ago and was awarded $1.3 billion in damages. A judge threw out the award, but the latest agreement clears the way for Oracle to ask an appeals court to restore the billion-dollar award, according to reports.

-- Written by Andrea Tse in New York.

>To contact the writer of this article, click here: Andrea Tse.

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