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Stocks Rallying On Strong Jobs Data, Powell Comments - U.S. Commentary

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Following the sell-off seen in the previous session, stocks have moved sharply higher over the course of the trading session on Friday. The major averages have shown substantial moves to the upside, with the tech-heavy Nasdaq leading the way higher.

In recent trading, the major averages have moved roughly sideways, hovering firmly in positive territory. The Dow is up 630.94 points or 2.8 percent at 23,317.16, the Nasdaq is up 240.78 points or 3.7 percent at 6,704.29 and the S&P 500 is up 70.57 points or 2.9 percent at 2,518.46.

The rebound on Wall Street partly reflects a positive reaction to a Labor Department report showing much stronger than expected job growth in the month of December.

The Labor Department said non-farm payroll employment soared by 312,000 jobs in December after climbing by an upwardly revised 176,000 jobs in November.

Economists had expected employment to increase by about 177,000 jobs compared to the addition of 155,000 jobs originally reported for the previous month.

Despite the much stronger than expected job growth, the report said the unemployment rate rose to 3.9 percent in December from 3.7 percent in November. The unemployment rate had been expected to come in unchanged.

However, the unexpected uptick by the unemployment rate came as the labor force jumped by 419,000 people compared to a much more modest 142,000-person increase in the household survey measure of employment.

The Labor Department also said average hourly employee earnings payrolls climbed by 11 cents to $27.48 in December, reflecting a 3.2 percent increase compared to the same month a year ago.

The annual rate of growth in average hourly employee earnings in December accelerated from the 3.1 percent increase seen in November, reaching its highest level since April of 2009.

Even as the jobs data offset recent concerns about the U.S. economy, Federal Reserve Chairman Jerome Powell noted the central bank "will be patient" with monetary policy as it watches the economy evolve.

Powell stressed that monetary policy is not on a "preset path" after the Fed raised interest rates four times in 2018 and forecast two rate hikes in the new year.

"Particularly with muted inflation readings that we've seen coming in, we will be patient as we watch to see how the economy evolves," Powell said.

The Fed chief said the central bank is always prepared to significantly shift the stance of monetary policy if incoming economic data does not meet expectations.

Powell's comments came as part of a joint discussion with former Fed Chairs Janet Yellen and Ben Bernanke at the American Economic Association and Allied Social Science Association annual meeting in Atlanta.

The rally on Wall Street also comes after China's Commerce Ministry said China and the U.S. would hold vice ministerial level trade talks in Beijing next week.

Sector News

Partly reflecting optimism about trade talks between the U.S. and China, steel stocks are turning in some of the market's best performances in mid-day trading. Reflecting the strength in the sector, the NYSE Arca Steel Index has surged up by 5.9 percent.

Considerable strength also remains visible among biotechnology stocks, as reflected by the 4.8 percent jump by the NYSE Arca Biotechnology Index.

Regeneron Pharmaceuticals (REGN) is posting a standout gain after Guggenheim Partners upgraded its rating on the biotech company's stock to Buy from Neutral.

Computer hardware stocks have also shown a significant rebound after helping to lead the markets lower on Thursday, with the NYSE Arca Computer Hardware Index spiking by 4.5 percent.

Software, transportation, tobacco, and financial stocks are also seeing significant strength amid a broad based rally on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index plummeted by 2.3 percent, while Hong Kong's Hang Seng Index surged up by 2.2 percent.

Meanwhile, the major European markets also showed strong moves to the upside on the day. While the German DAX Index spiked by 3.4 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index jumped by 2.7 percent and 2.2 percent, respectively.

In the bond market, treasuries have pulled back sharply after trending higher in recent sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 9.8 basis points at 2.652 percent.

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