US stocks surged to their best levels of the year after a much-awaited July jobs report was better than expected, signaling a likely turnaround in the long and painful recession.

The Dow Jones Industrial Average vaulted 113.81 points (1.23 per cent) to end at 9,370.07, its highest level since November 4.

The tech-heavy Nasdaq composite leapt 27.09 points (1.37 percent) to 2,000.25. The Standard & Poor's 500 index, measuring the broader market, advanced 13.40 points (1.34 per cent) to 1,010.48. The blue-chip Dow nailed its fourth consecutive week of gains and has now climbed nearly 45 per cent from its low in early March.

Stocks wobbled in early trading but quickly found their footing in upward momentum.

The Labour Department's report, published before the market open, "brought positive surprises all around," said Patrick O'Hare of Briefing.com.

"These are headlines that should warm the (Obama) administration in Washington and they will engender confidence in the idea that the worst of the downturn is over."

The data showed the unemployment rate fell unexpectedly to 9.4 per cent in July as job losses in the month narrowed to 247,000.