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Stocks Seeing Further Upside After Initial Jump - U.S. Commentary


After moving sharply higher early in the session, stocks have seen further upside over the course of morning trading on Friday. The major averages are rebounding strongly following the substantial pullback seen in the previous session.

Currently, the major averages are just off their highs of the session. The Dow is up 23.281.05 points or 2.6 percent at 23,281.05, the Nasdaq is up 206.95 points or 3.2 percent at 6,670.45 and the S&P 500 is up 66.45 points or 2.7 percent at 2,514.34.

Further buying interest was generated in recent trading after Federal Reserve Chairman Jerome Powell said the central bank "will be patient" with monetary policy.

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.

Traders have also reacted positively to a report from the Labor Department 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.

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

Steel stocks have shown a substantial move to the upside in morning trading, driving the NYSE Arca Steel Index up by 5.2 percent.

Considerable strength has also emerged among biotechnology stocks, as reflected by the 4.2 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.

Oil service, software, computer hardware, and transportation stocks have also moved sharply higher, while gold stocks are bucking the uptrend on Wall Street.

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 have all shown strong moves to the upside on the day. While the German DAX Index has spiked by 2.6 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are up by 2.1 percent and 1.9 percent, respectively.

In the bond market, treasuries are pulling 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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