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Wall St. rebounds on robust jobs report, dovish Powell remarks

Published 01/04/2019, 04:39 PM
Updated 01/04/2019, 04:39 PM
© Reuters. Traders look at price monitors as they work on the floor at the New York Stock Exchange (NYSE) in New York City

By Stephen Culp

NEW YORK (Reuters) - Wall Street rebounded on Friday to close at its highest in two weeks after a strong jobs report and assurances from Federal Reserve Chairman Jerome Powell that the central bank would be patient and flexible in steering the course of interest rates.

In a session emblematic of the elevated volatility that has gripped markets for weeks, all three major U.S. stock indexes surged more than 3 percent in one of the broadest advances in years. The gains more than wiped out the previous session's losses and were led by the technology sector, which bounced back from its largest one-day decline in more than seven years after Apple Inc (O:AAPL) cut it sales outlook.

Since hitting a 20-month low on Christmas Eve just a rounding error from levels considered to be a bear market, the S&P 500 Index (SPX) has now gained 7.7 percent. Friday's advance, measured by the number of stocks rising versus those falling, was the broadest in more than eight years.

The main catalysts for the surge were the monthly U.S. payrolls report, which blew past economists' forecasts with the largest number of jobs created in 10 months, and comments by the Fed's Powell.

In remarks to the American Economic Association, Powell soothed market nerves with assurances that the central bank is sensitive to risks that worry investors and is not on a preset path of interest rate hikes.

Speaking after months of volatility in world bond and stock markets, Powell avoided some of the communication missteps that in the past have roiled rather than calmed investors. He also pledged to stay in his post even if asked to quit by President Donald Trump, who has repeatedly chastised the man he put in the job over the Fed's repeated rate hikes.

"(Powell is) saying the right things: that the Fed is prepared to shift, that it's listening carefully, that it's sensitive to the messages the market is sending," said James Athey, Senior Investment Manager, Aberdeen Standard Investments, in London. "It's a good message for the market that is starting to consume itself out of fear."

Still, others warn that the market's up-and-down roller coaster ride this week could be the new normal.

"While days like today feel good, we still anticipate more economic weakness ahead and expect a continued back-and-forth grind in markets," said Eric Freedman, chief investment officer at U.S. Bank Wealth Management in Minneapolis.

News that China and the United States would hold trade talks in Beijing next week helped tariff-vulnerable industrials lead the Dow's rally, headed by Caterpillar Inc (N:CAT), United Technologies Corp (N:UTX), 3M Co (N:MMM) and Boeing Co (N:BA).

The Dow Jones Industrial Average (DJI) rose 746.94 points, or 3.29 percent, to 23,433.16, the S&P 500 (SPX) gained 84.05 points, or 3.43 percent, to 2,531.94 and the Nasdaq Composite (IXIC) added 275.35 points, or 4.26 percent, to 6,738.86.

All 11 major sectors of the S&P 500 ended the session in positive territory, with technology, communications services (SPLRCL), materials (SPLRCM) and industrial (SPLRCI) stocks seeing the largest percentage gains.

Apple shares rose 4.3 percent and led the tech sector's advance as the company began to recover ground lost after warning of a holiday quarter revenue shortfall on Wednesday.

Each of the FAANG momentum stocks, a group that includes Facebook Inc (O:FB), Apple, Amazon.com Inc (O:AMZN), Netflix Inc (O:NFLX) and Google parent Alphabet Inc (O:GOOGL) were trading higher.

Netflix jumped 9.7 percent after Goldman Sachs (NYSE:GS) added the streaming service to its "conviction list."

Advancing issues outnumbered declining ones on the NYSE by a 7.64-to-1 ratio; on Nasdaq, a 6.22-to-1 ratio favored advancers.

The S&P 500 posted no new 52-week highs and 1 new low; the Nasdaq Composite recorded 5 new highs and 19 new lows.

© Reuters. Traders look at price monitors as they work on the floor at the New York Stock Exchange (NYSE) in New York City

Volume on U.S. exchanges was 8.68 billion shares, compared to the 9.14 billion average over the last 20 trading days.

Latest comments

something changed on Friday. we continue upward trend. #maga
Thursday: AAPL issue lower profit guidance stated concern on slower global economy - a fact Friday: A robust job report and a dovish FED statement send market up - An assumption robust job report - what happened cant guarantee it will stay the same way forever. with stronger economic data came in, FED will more likely to continue tighten policy.
traiding is getting easy...you sell everything after a very good day, you buy again juste before the end of a very bad day...
How was there a bad jobs report yesterday and a great one today? The whole thing has gone mad!
Robust jobs and robust Unemployment! Dovish why? US and most key economic countries have a trouble with the proportion of production vs demand!? Did I miss something Mr. Barkin and Mr. Powell? And the governamental debt is huge in these countries also? Ups! ... US, Russia and Germany is on top?
lol roars back, whatever we all know its a pogo stick. It will waterfall monday then back up then back down over & over again forever
Over reaction. Hello $18k
After lunch; Trump will begin slaughtering the markets. Good luck!
Dow30 towards 18 no matter what Powell, trump n xi ping says
Everybody wants good news to drop on. Hard to speculate with the global economy and politics. Big swings on little news, a unknowing market.
Really, how come employers aren't calling to hire then?
Tarrifs are *******us. We were doing great before they were stupidly imposed. We need the removed ASAP
Yes and US debt is doing great too! :)
This market is stupid. It does rash moves based on one thing. A single stock, tweet or report etc.
Looks like the US reps now have extra ammunition just ahead of the trade talks with their Chinese counterparts. May be counterproductive to a potential good progress though, as the Chinese don't seem to bow down so easily.
The economy and the markets aren't aligned at this point...market is currently more bearish than bullish...yet the economy still shows strength. As we get deeper into a real bear market tgan you'll definetely see signs of how the economy is directly affected.
Obviously, otherwise they'd lose money! Watch trump in few hours and watch how the US dollars will drop
good news are bad. bad news are bad..
I don't think anyone knows what the ****is going on. One minute the economy is booming then the next day it's going down the drain. Wall street/Feds playing politics that's what I think.
Exactly. But they people have to say somethimg amd press write something
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