Wall Street rallied on Friday after the release of a strong employment report, causing widespread confidence that the Federal Reserve would be ready to raise interest rates later this month at the Federal Open Market Committee (FOMC). At the same time, the Organization of the Petroleum Exporting Countries (OPEC) opted to maintain near-maximum output, causing oil prices to tumble, weighing down on the energy sector. The latest nonfarm payrolls report has shown that 211,000 jobs have been added to the U.S. economy in November. Based on previous statements from the Federal Reserve, a strong labor market is a strict requirement for raising borrowing costs, further cementing the confidence in an announcement on the matter December 16. The Dow Jones Industrial Average rose 369.96 points, or 2.12%, to trade at 17,847.63. The S&P 500 index added 42.07 points, or 2.05%, to trade at 2,091.69. The Nasdaq Composite gained 104.74 points, or 2.08%, to close Friday’s trading session at 5,142.27.
The likelihood of a rate hike lifted the dollar, which in turn put downward pressure on the dollar-denominated oil in addition to the news from the latest OPEC meeting. The dollar was last seen up more than half a percent against the Japanese yen at 123.16 yen and the euro fell 0.62% against the dollar to trade at $1.0870. The euro had made its largest one-day advance in over six years on Thursday, fueled by the limited expansion of the European Central Bank’s easing programs in the region. The dollar index, which pits the greenback against a basket of six peer currencies, has risen 0.73% to 98.337. Brent crude oil futures moved 84 cents lower to trade at $43.00 a barrel and U.S. crude futures declined $1.11 to trade at $39.60 a barrel, breaking past the key support level of $40 a barrel. Spot gold gained 2.5% to touch its highest point in nearly three weeks of $1,088.70 an ounce. It has later retreated to $1,086.15.
This week’s major economic data releases begin today with the release of German industrial production reports and statements from Federal Reserve officials. On Tuesday, Japanese GDP data will be released, followed by Chinese import/export data and UK manufacturing and industrial production. Asian benchmarks have already moved lower in anticipation of these reports. On Wednesday, Chinese inflation and German balance of trade will be released, followed by the Bank of England’s interest rate decision and U.S. jobless claims on Thursday. To end the week, German inflation and U.S. retails sales data will be released on Friday.