The S&P 500 closed at its highest in five years on Friday after data showed employers kept the pace of hiring steady in December and the services sector expanded at a brisk rate.

The Dow Jones Industrial Average rose 43.85 points or 0.3 per cent, to 13,435.21, according to the latest figures. The S&P 500 gained 7.1 points or 0.5 per cent, to 1466.47 and the Nasdaq Composite added 1.09 points or 0.04 per cent, to 3101.66.

SPI futures were 18 points higher at 4723, indicating gains at the start of local sharemarket trade on Monday. The Australian dollar, meanwhile, was buying $US1.0480 in offshore trade, slightly up from late local trade on Friday.

For the week on Wall Street, the S&P added 4.6 per cent, the Dow rose 3.8 per cent and the Nasdaq jumped 4.8 per cent, to post their largest weekly percentage gains in more than a year.

The gains on the S&P 500 pushed the index to its highest close since December 2007 and its biggest weekly gain since December 2011.

Most of the gains came early in in the holiday-shortened week, including the largest one-day rise for the index in more than a year on Wednesday after politicians struck a deal to avert the "fiscal cliff."

The CBOE Volatility index, a measure of investor anxiety, dropped for a fourth straight session, giving the index a weekly decline of nearly 40 per cent, its biggest weekly fall ever. The close of 13.83 on the VIX marks its lowest level since August.

In Friday's economic reports, the Labor Department said non-farm payrolls grew by 155,000 jobs last month, slightly below November's level. Gains were distributed broadly throughout the economy, from manufacturing and construction to healthcare.

Also serving to boost equities was data from the Institute for Supply Management showing US service sector activity expanding the most in 10 months.

With the S&P 500 index at a five-year closing high, analysts said any gains above the index's intraday high near 1,475 in September may be harder to come by.

"We are getting to a point where we need a strong catalyst, which could be earnings, it could be three months of good economic data, it could be a variety of things," said Adam Thurgood, managing director at HighTower Advisors in Las Vegas, Nevada.

"What is going on right now is this conflicting view of fundamentals look pretty good and improving, and then you've got these negative tail risks that could blow everything up," Mr Thurgood said.

He referred to "a fiscal superstorm brewing" of issues still left unresolved in Washington, including tough federal budget cuts and the need to raise the government's debt ceiling all within a couple of months.

The rise in payrolls shown by the jobs data did not make a dent in the US unemployment rate still at 7.8 per cent.

A Reuters poll on Friday of economists at Wall Street's top financial institutions showed that most expect the Fed in 2013 to end the program with which it bought Treasury debt in an effort to stimulate the economy.

A drop in Apple shares of 2.6 per cent to $US528.36 kept pressure on the Nasdaq.

Adding to concerns about Apple's ability to produce more innovative products, rival Samsung Electronics is expected to widen its lead over Apple in global smartphone sales this year with growth of 35 per cent. Market researcher Strategy Analytics said Samsung had a broad product lineup.

Eli Lilly was among the biggest boosts to the S&P, up 3.7 per cent to $US51.56 after the pharmaceuticals maker said it expects its 2013 earnings to increase to $US3.75 to $US3.90 per share, excluding items, from $US3.30 to $US3.40 per share in 2012.

Fellow drugmaker Johnson & Johnson rose 1.2 per cent to $US71.55 after Deutsche Bank upgraded the Dow component to a "Buy" from a "Hold" rating. The NYSEArca pharmaceutical index climbed 0.6 per cent.

Shares of Mosaic gained 3.3 per cent to $US58.62. Excluding items, the fertiliser producer's quarterly earnings beat analysts' expectations, according to Thomson Reuters I/B/E/S.

Volume was modest with about 6.07 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, slightly below the 2012 daily average of 6.42 billion.

Advancing stocks outnumbered declining ones on the NYSE by 2,287 to 701, while on the Nasdaq, advancers beat decliners 1,599 to 866.

Reuters