Wall Street has surged after a strikingly upbeat May jobs report unexpectedly provided the clearest evidence yet that the US economy is headed for a quicker-than-anticipated recovery.

The Nasdaq breached its all-time closing high reached in February but pared its gains to end the session a hair’s breadth below it.

All three major US stock indexes advanced 2.0 per cent or more.

The S&P 500 and the Dow are now 5.7 per cent and 8.3 per cent below their respective closing records.

The benchmark S&P 500 is now 1.1 per cent below its year-to-date break-even level.

The US economy added a remarkable 2.5 million jobs last month, rebounding from April’s record 20.7 million drop and pushing the unemployment rate down to 13.3 per cent.

Analysts had expected unemployment to soar to a historic 19.8 per cent.

“The numbers are a huge surprise to the upside,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

“It would suggest a further confirmation the economy is coming back online,” Arone added.

“This is a strong signal that the effects are temporary and that the economy is improving.”

“Long may it last.”

US Treasury yields rose on the jobs data, giving a boost to interest rate-sensitive banks and sending the S&P 500 Banks index up 4.9 per cent.

Airlines, among the hardest hit by the coronavirus crisis, soared, with the ARCA Airlines index jumping 5.7 per cent.

But the World Health Organisation warned that the COVID-19 pandemic, which brought the global economy to its knees after mandated shutdowns, is far from over and new cases are on the rise.

Market participants now turn their focus to the US Federal Reserve, which holds a monetary policy meeting next week where the latest jobs data will almost certainly be discussed.

The Dow Jones Industrial Average rose 829.16 points, or 3.15 per cent, to 27,110.98, the S&P 500 gained 81.58 points, or 2.62 per cent, to 3,193.93 and the Nasdaq Composite added 198.27 points, or 2.06 per cent, to 9,814.08.

All 11 major sectors of the S&P 500 ended the session well in the black, with energy, financials and industrials leading the gainers in a continuation of a rotation into cyclicals, which were beaten up amid economic lockdowns.

Small caps and transportation stocks also outperformed, with the Russell 2000 and Dow Transportation up 3.8 per cent and 3.1 per cent, respectively.

Boeing Co surged 11.5 per cent, giving biggest the blue-chip Dow its biggest boost, on hopes of a pickup in air travel a day after American Airlines Group Inc and United Airlines said they would boost their US flight schedule next month.

Shares of luxury retailer Tiffany & Co jumped 6.5 per cent after Reuters reported LVMH’s $US16.2-billion ($A23.3-billion) takeover deal was back on track.

Drugmaker Novavaxe Inc advanced 3.7 per cent following its announcement that the US Department of Defense would give it up to $US60 million to manufacture its COVID-19 vaccine candidate.

Advancing issues outnumbered declining ones on the NYSE by a 5.03-to-1 ratio; on Nasdaq, a 3.08-to-1 ratio favoured advancers.

The S&P 500 posted 26 new 52-week highs and no new lows; the Nasdaq Composite recorded 89 new highs and three new lows.

Volume on US exchanges was 17.56 billion shares, compared with the 12.03 billion average over the last 20 trading days.

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