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U.S. Stocks Rally On Much Better Than Expected Jobs Data

wallstreet oct30 06dec19 lt

Stocks moved sharply higher over the course of the trading day on Friday, extending the rebound seen over the two previous sessions. With the advance, the major averages climbed back within striking distance of last week's record highs.

The major averages pulled back off their highs going into the close but remained firmly positive. The Dow soared 337.26 points or 1.2 percent to 28,015.06, the Nasdaq surged up 85.83 points or 1 percent to 8,656.53 and the S&P 500 jumped 28.48 points or 0.9 percent to 3,145.91.

For the week, the major averages showed little change. The Dow and the Nasdaq both edged down by 0.1 percent, while the S&P 500 crept up by 0.2 percent.

The rally on Wall Street came after the Labor Department's closely watched monthly employment report showed much stronger than expected U.S. job growth in the month of November.

The report said non-farm payroll employment surged up by 266,000 jobs in November after climbing by an upwardly revised 156,000 jobs in October.

Economists had expected an increase of about 180,000 jobs compared to the addition of 128,000 jobs originally reported for the previous month.

The Labor Department said notable job gains occurred in healthcare and in professional and technical services, while manufacturing employment also rose as General Motors (GM) workers returned from a strike.

With the stronger than expected job growth, the unemployment rate edged down to 3.5 percent in November from 3.6 percent in October. The unemployment rate was expected to remain unchanged.

Adding to the positive sentiment, preliminary data released by the University of Michigan showed a much bigger than expected improvement in U.S. consumer sentiment in the month of December.

The report said the consumer sentiment index climbed to 99.2 in December from the final November reading of 96.8. Economists had expected the index to inch up to 97.0.

With the much bigger than expected increase, the consumer sentiment index reached its highest level since hitting 100.0 in May.

Surveys of Consumers chief economist Richard Curtin said nearly all of the improvement in consumer sentiment in December was among upper income households, who reported near record gains in household wealth due to record high stock prices.

Sector News

Energy stocks turned in some of the market's best performances on the day, benefiting from a notable increase by the price of crude oil.

Crude for January delivery climbed $0.77 to $59.20 a barrel after OPEC and its allies confirmed plans to deepen oil production cuts to 1.7 million barrels a day.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index spiked by 4.7 percent, the NYSE Arca Natural Gas Index surged up by 3.1 percent and the NYSE Arca Oil Index soared by 2 percent.

Significant strength was also visible among steel stocks, as reflected by the 2.2 percent jump by the NYSE Arca Steel Index. The index ended the day at its best closing level in over four months.

Banking, semiconductor, and transportation stocks also saw considerable strength, while gold stocks were among the few groups to buck the uptrend amid a steep drop by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index edged up by 0.2 percent, while Hong Kong's Hang Seng Index jumped by 1.1 percent.

The major European markets also showed strong moves to the upside on the day. While the German DAX Index advanced by 0.9 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index surged up by 1.2 percent and 1.4 percent, respectively.

In the bond market, treasuries extended the pullback seen over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.5 basis points to 1.842 percent.

Looking Ahead

The Federal Reserve may move back into the spotlight next week, although the central bank is widely expected to leave interest rates unchanged at its monetary policy meeting.

Investors are also likely to keep an eye on any news of the trade front as well as reports on retail sales, consumer and producer prices, and import and export prices.

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