Stocks ended firmly higher Friday, while the dollar eased against its global peers and Treasury yields fell sharply, as investors reacted to a better-than-expected jobs report that could ease some near-term inflation concerns following hawkish Fed minutes earlier this week.
The Dow Jones Industrial Average finished up 700 points, or 2.13%, to 33,630, while the S&P 500 gained 2.28%. The tech-focused Nasdaq was up 280 points.
The Dow and S&P 500 each closed the week up 1.5%, while the Nasdaq gained 1%.
The U.S. economy added 223,000 new jobs last month, the Labor Department said Friday, but wage growth slowed notably from November, suggesting the gains may not feed as quickly into inflation pressures.
The BLS noted that hourly wages were up 0.3%, around half of last month's gain, and came in light of Street forecasts of a 0.4% gain. On a year-on-year basis, wages were up 4.6%, compared to the 5.1% pace recorded in December, the BLS said.
JOLTs data for the month of November had indicated around 10.45 million open positions, a level that analyst worried could feed in to pay gains over the coming months, and ADP's national employment report showed a stronger-than-expected gain of 235,000 last month.
"While the easing of wage pressures may initially be cheered by markets, workers are still not keeping up with inflation, therefore pressuring consumption trends," said John Lynch, CIO for Comerica Wealth Management in Charlotte, North Carolina.
"This report should add to investor confusion and heighten market volatility in the weeks ahead. It also complicates the Fed’s battle against inflation, though the minutes from the December monetary policy meeting reiterate the committee’s resolve," he added. "A 50-basis point move is back on the table for the next FOMC meeting in a few weeks."
Stocks were given a further boost by data showing a notable slowdown in service sector activity, the most important component of U.S. economic growth, as prices paid by non-manufacturing companies plunged lower in December.
Benchmark 2-year Treasury note yields, which touched the highest levels in 2 months yesterday, fell to 4.262% following the ISM data release as bets on a 50 basis point rate hike from the Fed slipped to around 23.8%, based on data from the CME Group's FedWatch. Benchmark 10-year notes fell 16 basis points to 3.56%.
Consumer price pressures are starting to ease in other major economies, however, in moves that could be replicated here in the U.S., following data Friday showing a significant pullback in headline inflation in Europe, which slowed to 9.2% in December from the record high print of 10.1% the previous month.
Tesla (TSLA) shares finished 2.3% higher following reports that the carmaker has extend price cuts in key Asia markets this week, suggesting further demand challenges into the start of the year.
World Wrestling Entertainment (WWE) shares surged 16.8% after founder Vince McMahon said he would return to the media and entertainment group following his retirement last year after a probe into so-called 'hush money' payments to a former employee.
Apple (AAPL) shares jumped 3.7% even as Samsung Electronics, the world's biggest chipmaker and key smartphone rival, said it will likely post its weakest quarter profit in eight years amid fading consumer and business demand.
Costco Wholesale (COST) shares, meanwhile, rose 7.3% after the bulk discount retailer posted solid December sales figures that suggest solid spending demand over the key Christmas holiday period.
