Futures Jump After Positive Jobs Report

Futures rallied Friday after a government jobs report that trumped expectations, following a sharp global selloff across in the previous session as investors were rattled over fears the European debt crisis was spreading to Spain and Italy.

Hiring picked up in July as the Labor Department reported employers added 117,000 jobs last month and the unemployment rate dipped to 9.1 percent, an improvement from the past two months. Economists had expected a gain of 85,000 jobs.

"Wow! An incredible surprise considering the horrific macro points we've received the past few months," said Todd Schoenberger, managing director of LandColt Trading. "Personal spending, manufacturing, GDP—all of this kept traders awake at night."

"Risk will reenter the markets, especially after yesterday's poisoned session," added Schoenberger. "Look for yields to rise, as well, with investors shifting allocations before the weekend."

The Dow Jones Industrial Average suffered its worst one day fall since Dec. 2008, tumbling 500 points. All three major averages tumbled into negative territory for the year as investors. In addition, all three averages fell into "correction territory," defined by a drop of 10 percent from its peak from its intraday high in Apr. 29.

Among earnings, Procter & Gamble posted better-than-expected earnings as cost cuts and price increases helped mitigate the impact of more expensive materials.

Priceline surged after the online travel agency reported a higher profit that beat expectations as strong growth at its overseas markets boosted bookings. At least two brokerages raised their price targets on the firm.

Bank of America slipped after Wells Fargo cut its rating on the financial giant to "market perform" from "outperform."

In Europe, Italian 10-year government bond yields climbed above their Spanish equivalent while the cost of insuring the country' debt against default climbed on Friday, as Italy was hammered by market concerns that the contagion of the euro zone's debt crisis could not be contained.

China and Japan called for global cooperation after a financial market rout signaled fear that Europe's debt crisis could spin out of control and the U.S. economy may slide into another recession.

On Tap Next Week:

MONDAY: Employment trends index
TUESDAY: NFIB small biz optimism index, productivity and costs, 3-yr note auction, FOMC mtg announcement; Earnings from Disney
WEDNESDAY: Weekly mortgage apps, wholesale trade, oil inventories, 10-yr note auction, treasury budget; Earnings from Macy's, Cisco
THURSDAY: International trade, jobless claims, 30-yr bond auction, money supply; Earnings from Kohl's, Nordstrom, Nvidia
FRIDAY: Retail sales, consumer sentiment, business inventories; Earnings from JCPenney

More From CNBC.com: