US stocks jump as NFP data eases rate policy worries

The nonfarm payrolls rose by 223,000 jobs in December according to the data announced by the US Labour Department while a 0.3% rise in average earnings was smaller than expected and lower than the previous month.

The numbers for November were revised to show nonfarm payrolls rose by 256,000 and average earnings grew by 0.4%.

The Dow Jones Industrial Average was up 363.92 points, or 1.11%, at 33,294.00, the S&P 500 was up 34.88 points, or 0.92%, at 3,842.98, and the Nasdaq Composite was up 63.53 points, or 0.62%, at 10,368.77.

Wall Street’s main indexes rallied on Friday following the announcement of key data including cooling wages and moderation in US jobs growth in December calmed worries over the Federal Reserve’s rate-hike trajectory.

The US central bank is expected to look at these figures and say the labour market is still pretty robust. Optimistic views see that a slowdown in the growth of average hourly earnings is a positive thing, but it is worth remembering that it is a single data point.

Another set of data showed US services activity contracted for the first time in more than 2-1/2 years in December amid weakening demand, with more signs of inflation abating.

Big technology and other growth stocks such as Microsoft Corp, Apple Inc and Meta Platforms Inc rose between 0.5% and 2.0%, helped by a decline in the 10-year U.S. Treasury yield.

Tesla Inc dropped 4.2% after the company cut electric-car prices in China for the second time in less than three months. Except healthcare stocks, all the major S&P 500 indexes were in the green led by gains in energy shares.

A resilient labour market has powered the economy through consumer spending, but could prompt the Fed to lift its target interest rate above the 5.1% peak it had projected last month and keep it there for a while.

Earlier this week, minutes from the Fed’s December meeting showed that the central bank was laser-focused on fighting inflation even as officials agreed to slow the pace of rate hikes to limit risks to economic growth.

Money market bets of a 25-basis point hike in the February policy meeting shot up to 73% and the terminal rate was seen edging below 5% by June.