The nonfarm payrolls rose by 223,000 jobs in December, data from the Labor Department showed, while a 0.3% rise in average earnings was smaller than expected and lower than the previous month.

The numbers for November were revised to show nonfarm payrolls rose by 256,000 and average earnings grew by 0.4%.

"Fed will look at these numbers and say the labor market is still pretty robust," said Richard Flax, chief investment officer at Moneyfarm.

"Maybe if you wanted to be very optimistic, you would say that a slowdown in the growth of average hourly earnings is a positive thing, but it's a single data point."

Another set of data showed U.S. services activity contracted for the first time in more than 2-1/2 years in December amid weakening demand, with more signs of inflation abating.

Big technology and other growth stocks such as Microsoft Corp., Apple Inc. and Meta Platforms Inc. rose between 0.5% and 2.0%, helped by a decline in the 10-year U.S. Treasury yield.

Tesla Inc dropped 4.2% after the company cut electric-car prices in China for the second time in less than three months.

Except healthcare stocks, all the major S&P 500 indexes were in the green led by gains in energy shares.

A resilient labor market has powered the economy through consumer spending, but could prompt the Fed to lift its target interest rate above the 5.1% peak it had projected last month and keep it there for a while.

Earlier this week, minutes from the Fed's December meeting showed that the central bank was laser-focused on fighting inflation even as officials agreed to slow the pace of rate hikes to limit risks to economic growth.

Money market bets of a 25-basis point hike in the February policy meeting shot up to 73% and the terminal rate was seen edging below 5% by June.

Investors will also focus on comments from a slew of Fed officials scheduled to speak later on Friday.

At 10:28 a.m. ET, the Dow Jones Industrial Average was up 363.92 points, or 1.11%, at 33,294.00, the S&P 500 was up 34.88 points, or 0.92%, at 3,842.98, and the Nasdaq Composite was up 63.53 points, or 0.62%, at 10,368.77.

Bed Bath & Beyond Inc slid 15.7% after Reuters reported that the home goods retailer was preparing to seek bankruptcy protection in coming weeks.

Advancing issues outnumbered decliners for a 4.77-to-1 ratio on the NYSE and a 1.70-to-1 ratio on the Nasdaq.

The S&P index recorded 13 new 52-week highs and five new lows, while the Nasdaq recorded 45 new highs and 52 new lows.