After turning in a lackluster performance in the previous session, stocks showed a substantial upward move during trading on Friday, as traders reacted positively to a much better than expected report on the employment situation in the month of January. The major averages moved roughly sideways in afternoon trading, closing firmly in positive territory. With the gains, the Dow ended the session at its best closing level in over three years, while the Nasdaq reached an eleven-year closing high.

President Barack Obama seemed pleased with the better than expected employment numbers released Friday but warned Congress about actions that could slow down the recovery. Speaking at a fire station in Arlington, Virginia, Obama said, "This morning, we received more good news about our economy. In January, American businesses added another 257,000 jobs. The unemployment rate came down because more people found work."

Activity in the U.S. service sector expanded at a faster than expected rate in the month of January, according to a report released by the Institute for Supply Management on Friday, with the index of activity in the sector rising to an eleven-month high. The ISM said its non-manufacturing index rose to 56.8 in January from a revised 53.0 in December, with a reading above 50 indicating growth in the service sector. Economists had expected the index to edge up to 53.3.