New York - Stocks are finishing sharply higher on Wall Street, breaking a four-day losing streak, after the government reported a big pickup in hiring by U.S. employers in July.

The Dow Jones industrial average closed up 217 points at 13,096 on Friday. The Standard & Poor's 500 index rose 26 points to 1,391. The Nasdaq surged 58 points, ending the day at 2,968.

Markets had been slumping all week after central banks in the U.S and Europe took no new action to shore up the economy, as many investors had hoped.

The Labor Department reported that employers added 163,000 jobs last month. That was far more than analysts were expecting.

Five stocks rose for every two that fell on the New York Stock Exchange. Volume was average, 3.7 billion shares.

The Labor Department's closely watched monthly jobs report gave investors assurance that the U.S. economy may be doing better all on its own. U.S. employers added 163,000 jobs last month, a sharp turnaround following months of sluggish hiring.

Between April and June, the economy added an average of just 73,000 jobs a month compared with 226,000 jobs per month in the first three months of the year.

"It's one step forward," said Joe Bell, senior equity analyst at Schaeffer's Investment Research. "But we would like to see continued improvement in the labor market in coming months."

There was also some good news from the service sector, a broad part of the economy that includes banking, retail, health care and utilities.

The Institute for Supply Management reported that U.S. service companies grew at a slightly faster pace in July, with a reading of 52.6. Any number above 50 means that business is growing for service providers.

The benchmark 10-year Treasury note was yielding 1.58 percent, up from 1.48 percent on Thursday. Bond yields rise when investors move money out of low-risk assets like U.S. government debt.

Oil prices also soared as investors became more optimistic about the economy following the jump in hiring by U.S. employers. Benchmark crude shot up $4.46 to $91.58 on the New York Mercantile Exchange.

The broader Standard & Poor's 500 index rose 28 points to 1,393, and the Nasdaq composite added 62 points to 2,972.

Despite the gain in hiring, there were still enough signs of weakness in the latest jobs report to keep hope alive that the Federal Reserve may take new steps to kick-start the economy at its next meeting in September. A separate survey of households by the Labor Department found that the unemployment rate rose to 8.3 percent in July from 8.2 percent in June.