U.S. Stocks Rescued by Jobs Data, Powell Reassurance

A combination of economic data and central-bank reassurance powered U.S. stocks sharply higher on Friday, as the major indexes headed for one of their best point gains since the financial crisis.

Dramatic Relief Rally

Wall Street’s volatile swings continued on Friday, this time in the direction of massive gains. The Dow Jones Industrial Average climbed 694.27 points, or 3.1%, to 23,380.49. All 30 index members finished higher. Apple Inc. (AAPL), which plunged the market on Thursday, gained 3.9%.

The broad S&P 500 Index rose 3.4% to close at 2,531.94. All 11 primary sectors contributed to the gains, with information technology stocks rising more than 4%. The sector as a whole fell more than 5% on Thursday.

The technology-heavy Nasdaq Composite Index jumped 4.3% to finish at 6,738.86.

Blowout Jobs Report

Investors were hoping for a Goldilocks job report to soothe their anxiety following a brutal end to 2018. Instead, they were blown away by some of the best numbers since the financial crisis. Case in point: average hourly earnings rose 3.2% annually, the highest since 2009. Compared to November, wages increased 0.4%. Both numbers were above expectations.

The official nonfarm payrolls number came in at 312,000, blowing past expectations for 184,000 and the highest in ten months.

The official jobless rate rose unexpectedly to 3.9% from 3.7% but was that was largely due to an unexpected rise in workforce participation. The participation rate climbed to 63.1% in December compared with 62.9% the month before.

Powell Not Concerned

Federal Reserve Chairman Jerome Powell believes fears of a slowing U.S. economy are “well ahead of the data,” echoing a previous assessment made in support of raising interest rates.

“U.S. data seem to be on track to sustain good momentum into the new year,” Powell said in a conference in Atlanta, as quoted by the Financial Times.

Economic indicators have been largely positive since Trump took office, but an abrupt slowdown in a closely-watched manufacturing index has exacerbated fears that the U.S.-China trade row is beginning to impact business plans. The trade impasse has exacerbated a multi-year cooldown in the Chinese economy, as evidenced by the recent meltdown in retail sales and the unexpected contraction of its manufacturing sector.

Powell and the rest of the Federal Open Market Committee (FOMC) are scheduled to meet at the end of the month to discuss monetary policy and the economy. Interest rates are expected to remain on hold for the foreseeable future, based on the latest Fed Fund futures prices, with some traders forecasting rates to fall before rising again.

Featured image courtesy of Shutterstock.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi