Wall Street has surged to close at its highest level in two weeks after a strong jobs report and assurances from US Federal Reserve Chairman Jerome Powell that the central bank would be patient and flexible in steering the course of interest rates.
Based on the latest available data, the Dow Jones Industrial Average rose 746.94 points, or 3.29 per cent, to 23,433.16, the S&P 500 gained 84.05 points, or 3.43 per cent, to 2,531.94 and the Nasdaq Composite added 275.35 points, or 4.26 per cent, to 6,738.86.
Technology stocks led the charge, jumping 4.3 per cent, bouncing back from the prior session’s worst day for the sector in over seven years.
The Labor Department’s employment report showed the US economy added 312,000 new jobs in December, far more than the 177,000 analysts expected.
Powell, in remarks to the American Economic Association, soothed market nerves with assurances that the central bank is sensitive to risks that worry investors and is not on a preset path of interest rate hikes.
‘When you get such a strong jobs report and a Fed chairman saying he’s patient and flexible it sends a message to the markets that we’re moving in the right direction,’ said Robert Pavlik, chief investment strategist, senior portfolio manager at SlateStone Wealth in New York.
‘We’re not out of the woods yet,’ Pavlik added. ‘But it’s the first time (Powell has) said anything that’s dovish enough for the markets liking.’
News that China and the United States would hold trade talks in Beijing next week helped tariff-vulnerable industrials lead the Dow’s rally, headed by Caterpillar, United Technologies, 3M and Boeing.Earlier, stock markets were buoyed by news that China and the United States will hold trade talks in Beijing on Monday and Tuesday.
‘The market’s been grappling with growth, the Fed and China,’ said Tony Roth, chief investment officer at Wilmington Trust in Wilmington, Delaware. ‘Those have been addressed today in a direct way.’
Keeping with Friday’s risk-on theme, oil prices rose in tandem with equities.
Brent crude futures rose $US1.11 to settle at $US57.06 a barrel, a 1.98 per cent gain. US crude futures settled 87 cents higher at $US47.96 a barrel, a 1.85 per cent gain.
Safe-haven assets retreated. Treasury yields rose sharply, and the dollar gained 0.8 per cent against the yen. Spot gold prices, which reached a six-month peak on Thursday, dropped 0.7 per cent.
‘Longer-term bonds have sold off here today in price,’ said Tim Ghriskey, chief investment officer at Inverness Counsel in New York. ‘There aren’t signs of significant economic weakness.’
Powell’s dovish comments pushed down the US dollar index , which gave up earlier gains and last traded down 0.1 per cent. The euro was little changed.