U.S. stocks ended sharply higher on Friday as investors assessed a monthly jobs report that showed robust job additions in September as well as slowing wage growth. All the three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) advanced 0.9% or 288.01 points to end at 33,407.58 points.
The S&P 500 jumped 1.2% or 50.31 points, to close at 4,308.50 points. Tech and communication services stocks were the best performers.
The Technology Select Sector SPDR (XLK) jumped 1.9%, while the Communication Services Select Sector SPDR (XLC) rose 1.8%. Ten of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq rose 1.6% or 211.51 points to close at 13,431.34 points.
The fear-gauge CBOE Volatility Index (VIX) was down 5.62 % to 17.45. A total of 10.58 billion shares were traded on Friday, lower than the last 20-session average of 10.72 billion. Advancers outnumbered decliners on the NYSE by a 1.96-to-1 ratio. On the Nasdaq, a 1.73-to-1 ratio favored advancing issues.
Stocks Rebound on Favorable Jobs Data
Stocks made a solid rebound on Friday after initially declining following the release of the robust monthly jobs report. The Dow was down more than 270 points at one point before jumping by 400 points at its session’s peak.
The U.S. economy added 336,000 jobs in September, the Bureau of Labor Statistics said. The numbers came in a lot higher than the consensus estimate of 176,000. Also, job gains in July and August were revised higher.
Investors had been worrying that solid job additions would mean higher wage growth, which could add to the ongoing inflationary pressures that could compel the Fed to go for more interest rate hikes and keep rates higher for a longer period.
However, the jobs report also had some positives as data showed wage growth slowed in September. Average hourly wages rose a modest 0.2% in September. This brings the 12-month rate of change through September to 4.2%, which was slower than the 4.3% year-over-year rate seen in August.
This lifted investors’ sentiments, leading stocks to make a turnaround.
Meanwhile, Federal-funds-futures traders are once again optimistic that the Federal Reserve could keep its benchmark interest rates unchanged at the existing range of 5.25%-5.5%.
Also, the yield on the 10-year Treasury note increased 6.8 basis points to 4.783% on Friday after trading at almost its highest level in 16 years. Tech stocks were the biggest gainers following the pullback in treasury yields from its day’s high.
Shares of Apple Inc. (AAPL) rose 1.5%, while Microsoft Corporation (MSFT) jumped 2.5%. Shares of NVIDIA Corporation (NVDA) gained 2.4%. NVIDIA sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Economic Data
The jobs report also showed that the unemployment rate remained unchanged at 3.8% in September, higher than the consensus estimate of 3.7%.
Weekly Roundup
For the week, the Dow ended 0.3% down, declining for the third straight week. The S&P 500 bounced back in the green to finish 0,5% higher for the week, ending its four-week losing streak. The Nasdaq ended 1.6% higher, recording its second straight week of gains.
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