Stocks jump as US adds more jobs than expected

Updated at 12:03 p.m. ET

By Andrea Tse and wire reports

Stocks surged Friday after government reports on employment and business activity for July came in better than expected.

The Dow Jones Industrial Average ($INDU) was up 251 points at 13,130. The S&P 500 ($INX) was up 28 points at 1,393. The Nasdaq Composite ($COMPX) was up 65 points at 2,975.

The Labor Department reported that July nonfarm payrolls rose by 163,000, better than the expected 100,000. It was the biggest monthly gain since February. Average hourly earnings edged up by 2 cents to $23.52.

The unemployment rate rose to 8.3%, and the June nonfarm payrolls number was revised downwardly to 64,000. The jobless rate rose because the government uses two surveys to measure employment, The Associated Press explained. While a survey of businesses showed job gains, the unemployment rate comes from a survey of households, which showed fewer people had jobs. Economists say the business survey is more reliable.

The Institute for Supply Management's July nonmanufacturing index came in at 52.6 after a June reading of 52.1, CNBC reported. Economists had expected a reading of 52. A reading above 50 indicates expansion.

• MORE MARKETS | Commodities | Treasurys | Currencies | World stocks

American International Group (AIG) reported second-quarter after-tax operating income of $1.9 billion, or $1.06 a share, topping analysts' estimates of 57 cents a share. Revenue rose 3% to $17.12 billion. The insurance giant repaid all of the loans it owed to the Federal Reserve as part of bailout funding it received in 2008 and 2009.

Procter & Gamble (PG) reported an increase in net income of 45% in its fourth quarter, helped by the sale of its snacks division. Excluding special items, earnings came in at 82 cents a share, exceeding estimates of 77 cents a share. Overall, revenue fell by 1% to $20.21 billion, missing Wall Street's target of $20.26 billion because of higher commodity costs and a strong dollar.

LinkedIn (LNKD) on Thursday met Wall Street's earnings expectations for its second quarter but beat on the top line. The company reported second-quarter earnings of 16 cents a share on revenue of $228.2 million. Analysts were expecting 16 cents a share on revenue of $216.28 million. LinkedIn 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. Toyota expects record 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. 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 $1.3 billion jury award.

Bain Capital and Thomas H. Lee Partners are among several parties that have put in initial bids for McGraw-Hill's (MHP) education business, sources told Reuters. A deal could value the world's second-largest education company by sales at around $3 billion.