Futures on the Dow Jones industrial average were up 0.32 percent, futures on the Standard & Poor's 500 index were up 0.25 percent and those on the Nasdaq 100 index were up 0.27 percent.
Investors are eagerly waiting for the government's monthly nonfarm payrolls report, which is the most closely watched economic data pertaining to the jobs market and is a key gauge for the direction and pace of the economic recovery. Economists expect a rise of 145,000 jobs last month, compared to a gain of 163,000 jobs in July while the unemployment rate is expected to remain at 8.3 percent.
The much-awaited U.S. jobs report, to be released Friday, follows data on private sector hiring, ISM services and Challenger reports that suggested that the struggling job market in the world's largest economy may have gained some traction last month.
Payroll firm ADP Employer Services said Thursday that the U.S. private sector added a better-than-expected 201,000 jobs in August, up from an upwardly revised 173,000 jobs added in July and also topped Thomson Reuter's expectation of 140,000 new jobs while the U.S. services sector expanded at a faster pace than expected in August. In particular, the employment index climbed 4.5 points to 53.8 in August, the highest level since April.
The rebound in ISM services jobs component, combined with surge in private sector hiring, raised hopes that August employment report would be better than the initial consensus indicated. An improved labor market conditions could stop the central bank from taking additional measures at its upcoming Fed Open Markets Committee meeting next week.
"If the U.S. non-farm payrolls match the ADP report, then it may have an even better effect than a third round of quantitative easing. It will be like getting rid of a cold without having any medicine," said Rhoo Yong-seok, chief market analyst at Hyundai Securities in Seoul.
U.S. Fed Chairman Ben Bernanke's last week speech at Jackson Hole, Wyo., increased the odds of further accommodation, or QE3. Bernanke said the central bank would provide additional policy accommodation if necessary although he stopped short of providing a clear signal of imminent action. Bernanke's speech was interpreted by the market participants as an indication of a stronger push for QE3.
However, the analysts at Credit Agricole expect that an August employment report close to their forecast of 145,000 jobs would not dissuade the FOMC from increasing its monetary policy accommodation at its Sept. 13 meeting.
On Thursday, the U.S. stocks rallied to multi-year highs after the European Central Bank (ECB) announced the widely anticipated bond-buying program aimed at lowering the struggling euro zone countries' borrowing costs.
At a press conference in Frankfurt Thursday, ECB President Mario Draghi unveiled a new bond-buying plan called "Outright Monetary Transactions (OMT)" which is aimed at lowering the short-term borrowing costs of the most debt-strapped countries like Italy and Spain. The OMT will focus on bonds maturing within three years in countries implementing the approved fiscal austerity measures. There is no exact limit for purchases it can make and would not target specific bond yields.
The European markets continued the upward rally Friday, a day after the ECB agreed to launch a new potentially unlimited bond-buying program. London's FTSE 100 was up 13.17 points, Germany's DAX 30 Index rose 56.75 points and France's CAC 40 climbed 29.04 points.
The Asian stocks joined the global rally after the ECB announcement and news that China regulators had approved another batch of infrastructure projects which should stabilize and reaccelerate the growth in the world's second largest economy. Japanese benchmark Nikkei surged 2.20 percent and Hong Kong's Hang Seng gained 3.09 percent while Chinese Shanghai Composite climbed 3.70 percent.