U.S. stocks rose on Thursday, lifting the Dow industrials above 17,000, after the government reported the economy created a better-than-expected 288,000 jobs in June and the unemployment rate fell to 6.1 percent.

"I would categorize it as a fantastic number, and a great transition to earnings season next week," said David Lyon, a global investment specialist at JP Morgan Private Bank in San Francisco.

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Lorillard rallied after CNBC reported the tobacco maker could be taken over by Reynolds American within weeks. PetSmart jumped after hedge fund Jana Partners disclosed a 9.9 percent stake and said it plans to ask the retailer to explore a sale.

"It was a very good report; the next leg up in stocks is the 2,000 mark on the S&P 500," said JJ Kinahan, chief strategist at TD Ameritrade.

Read MoreDow 17,000? Another milestone matters more



Flat ahead of the jobs report, the yield on the 10-year Treasury jumped as much as five basis points and was lately up 1 basis point at 2.638.



"The bond market is saying, the economy is healthier than people are giving it credit for," said Kinahan.



The European Union kept monetary policy unchanged as expected on Thursday following last month's measures to stimulate the economy.



Read MoreECB holds fire, all eyes turn to Draghi