Wall Street surges on strong jobs report, dovish Powell comments

U.S. stocks surged to over two-week highs on Friday after a robust U.S. jobs report pointed to sustained economic strength and Federal Reserve Chairman Jerome Powell suggested the central bank would be flexible with monetary policy.

The S&P and Dow Industrials jumped about 3.5 percent and the Nasdaq over 4 percent, putting the three indexes on course to erase all losses from a plunge on Thursday when slowing U.S. factory activity and Apple Inc`s dire revenue warning fuelled fears of a global economic slowdown.

Nonfarm payrolls surged by 312,000 jobs in December, the largest gain since February and sailed past economists` expectations of 177,000. The Labor Department report also showed an improvement in wages.

There were concerns that the data would let the Fed stick with its projection for two interest rate hikes in 2019, but traders kept bets that the central bank will hold fire this year and begin cutting rates in 2020.

Powell also moved to mollify financial markets, saying that while economic momentum is solid, the Fed is sensitive to the risks highlighted by investors and will be patient with its monetary policy in 2019.

"His (Powell`s) comments are being interpreted as dovish," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

"The things he said today are leading traders and investors to believe that the Fed is willing to potentially change their projections for rate hikes this year."

All the 11 major S&P sectors were higher. Technology stocks <.splrct>, coming off their biggest one-day percentage drop since August 2011 on Thursday, jumped 4.40 percent, leading the gains.

The day got off to a strong start after China said it would hold a new round of talks with the United States next week to try and resolve their trade dispute. That helped the industrials sector <.splrci> gain 3.60 percent.

At 1:00 p.m. ET, the Dow Jones Industrial Average <.dji> was up 775.82 points, or 3.42 percent, at 23,462.04, the S&P 500 <.spx> was up 84.12 points, or 3.44 percent, at 2,532.01 and the Nasdaq Composite <.ixic> was up 272.41 points, or 4.21 percent, at 6,735.91.

The heavyweight FAANG stocks — Facebook Inc , Apple, Amazon.com Inc , Netflix Inc and Google-parent Alphabet Inc — surged between 3.8 percent and 8.6 percent, bolstering gains on the S&P and Nasdaq.

While defensive real estate <.splrcr>, utilities <.splrcu> and consumer staples <.splrcs> rose the least among the sectors, their gains were between 1.34 percent and 1.87 percent.

Despite the rally, U.S. stocks are anchored near mid-2017 lows, with a chunk of the losses coming last month in what was the S&P`s worst December since the Great Depression. The selloff was squarely due to mounting evidence of a global economic slowdown and fears of its effect on corporate profits.

Analysts now estimate earnings at S&P 500 companies rose 15.1 percent in the fourth quarter, outpacing the 14.8 percent growth in the year-ago quarter, according to Refinitiv`s IBES. But, that is lower than the 20 percent growth forecast in early October.

Advancing issues outnumbered decliners for a 7.13-to-1 ratio on the NYSE and a 6.95-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and one new low, while the Nasdaq recorded four new highs and 12 new lows.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)