Dow Jones Jumps Over 800 Points
04 January 2019 - 6:41PM
Dow Jones News
By David Hodari and Corrie Driebusch
*US Stock-Gains Accelerate in Afternoon Trading
*DJIA Now Up 820 Points (3.6%)
*S&P 500 Climbs 3.6%; Nasdaq Composite Rises 4.4%
(Article below will update)
U.S. stocks rose sharply Friday, bouncing back from their worst
two-day start to a year since 2000, after a strong jobs report and
signs that the Federal Reserve will be flexible with its
interest-rate policy.
Stocks rose, lifting major indexes into positive territory for
the week, as the better-than-expected hiring in December suggested
a healthier U.S. economy than some investors and economists
anticipated after waves of volatility swept through stock and bond
markets in recent weeks amid fears of slowing growth around the
world.
Federal Reserve Chairman Jerome Powell's commentary in Atlanta
also boosted investor enthusiasm for stocks. Mr. Powell said in his
remarks that U.S. data seems to be on track to sustain good
momentum into the new year, but that he is watching financial
markets and is "prepared to adjust policy quickly and flexibly" if
necessary.
Investors took note of the comments in part due to their timing,
hours after a fresh jobs report and following developments this
week that stoked fears about slowing economic growth. Traders in
Stifel Nicolaus' Baltimore office plugged in their headphones
Friday morning to listen to Chairman Powell's commentary for clues
about the path of Fed policy. In the weeks leading up to corporate
results, remarks from the Fed and economic data are what traders
and investors say they are focusing most on.
Chairman Powell appears to be "more open to listening to what
the market is telling him rather than just the data is telling
him," said Justin Wiggs, Stifel's managing director in equity
trading. That's a good thing for stock investors, he added.
The Dow Jones Industrial Average rose more than 700 points, or
3.2%, in recent trading. The S&P 500 and the Nasdaq Composite
gained 3.3% and 4.1%, respectively. Major indexes were led higher
by tech companies and stocks most heavily exposed to the Chinese
economy, such as Caterpillar, after China confirmed a two-day
meeting with U.S. representatives to work to resolve the countries'
trade dispute. All three indexes were set to end the week more than
1% higher.
The yield on 10-year U.S. Treasurys, meanwhile, was last up to
2.659% from 2.557% late Thursday. Yields rise as prices fall.
U.S. nonfarm payrolls increased a seasonally adjusted 312,000 in
December, the Labor Department said Friday, the biggest jump since
February. Average hourly earnings rose a seasonally adjusted 0.4%
from November and 3.2% from December 2017, the best full-year gain
since 2008.
Every month, investors parse jobs reports for clues on the
health of the U.S. economy and for their significance to Federal
Reserve monetary policy, which has given investors cause for
concern in recent months. Economists polled by The Wall Street
Journal forecast the addition of 176,000 jobs to the U.S. economy
in December.
"These numbers are not consistent with a recession in 2019,"
said Darrell Cronk, chief investment officer for wealth and
investment management at Wells Fargo & Co. He added that while
he expects global growth and U.S. economic growth to slow this
year, he believes many investors have become too pessimistic.
Since late September, the S&P 500 has fallen more than 16%
through Thursday's close, while the Nasdaq Composite was off more
than 20% from its late-August high. Weak manufacturing data and a
sales warning from Apple Inc. shook the markets on Thursday,
sending the Dow industrials down more than 650 points.
Oil prices climbed toward their fifth consecutive session of
gains following production cuts from the Organization of the
Petroleum Exporting Countries and its allies. U.S.-traded crude oil
on Friday rose 1.8% to $47.96 a barrel.
Stock markets also rallied in Asia, where the Shanghai Composite
Index, the Shenzhen A-Share and the Hang Seng all rose more than
2%. Japan's Nikkei returned to trading after a public holiday to
drop 2.3% in a delayed reaction to losses across global markets
earlier in the week.
Around the globe stocks also rose, while haven assets also
reversed their moves from earlier in the week. China-exposed
equities outperformed in Europe. The broader Stoxx Europe 600 index
climbed 2.8%, also buoyed by its energy constituents, which rose
partly on the continuing resurgence in energy prices.
Markets rallied after China's commerce ministry said that a U.S.
trade delegation led by Deputy Trade Representative Jeffrey Gerrish
will visit China on Monday and Tuesday. Equities markets also
showed some relief after House Democrats passed a spending package
aimed at reopening the federal government, even though adoption by
the Senate appeared unlikely.
Upbeat data from a private gauge of China's services sector, as
well as a move by the People's Bank of China to support growth by
lowering banks' reserve-requirement ratio, also supported Asian
markets.
Write to David Hodari at David.Hodari@dowjones.com and Corrie
Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
January 04, 2019 13:26 ET (18:26 GMT)
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