By Shreyashi Sanyal
(Reuters) – U.S. stocks jumped on Friday, rebounding from a steep slide a day earlier, as a robust U.S. jobs report added to optimism from proposed trade talks between the United States and China next week.
Nonfarm payrolls increased by 312,000 jobs in December, the largest gain since February and beat economists' expectations of 177,000 jobs. Wages also rose, while the unemployment rate moved off a 49-year low, the Labor Department said.
The report allayed fears over slowing economic growth, while plans of a fresh round of U.S.-China trade talks on Jan. 7-8 also helped boost sentiment.
All the 11 major S&P sectors were higher with industrial (SPLRCI) and technology (SPLRCT) rising about 2 percent. The biggest gain was in energy stocks (SPNY), which jumped 2.6 percent as crude oil prices rose. [O/R]
Financials (SPSY) rose as banks stand to gain from higher interest rates. The KBW Bank Index (BKX) gained 2.20 percent.
"It's going to be an interesting day to say the least. We'll see if the early strength in the market holds, given (the jobs report) will likely give more reason for the Fed raising, not cutting, rates as some had speculated during the day yesterday," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
The jobs report bolstered concerns that the Federal Reserve would stick with its plan for two interest rate hikes this year.
At 9:50 a.m. ET the Dow Jones Industrial Average (DJI) was up 406.06 points, or 1.79 percent, at 23,092.28, the S&P 500 (SPX) was up 45.08 points, or 1.84 percent, at 2,492.97 and the Nasdaq Composite (IXIC) was up 133.75 points, or 2.07 percent, at 6,597.25.
The yield on two-year U.S. treasury notes (US2YT=RR), which reflect traders' expectations of rate hikes, rose after the jobs report. Those yields fell below the Fed's policy rate for the first time in over a decade on Thursday.
Investors will be looking for clues on monetary policy from Fed Chair Jerome Powell's speech scheduled at 10:15 a.m. ET (1515 GMT).
Fears of a slowdown were heightened on Thursday after data showed U.S. factory activity slowed last month and Apple Inc (O:AAPL) gave a dire revenue warning that sent Wall Street plunging over 2 percent.
Apple jumped 2.3 percent, coming off a 10 percent slide on Thursday, and helped bolster the S&P and the Nasdaq along with Microsoft (O:MSFT) and Amamzon.com Inc (O:AMZN).
Shares of trade-sensitive stocks rose, with gains in Boeing Co (N:BA), Caterpillar (N:CAT) and 3M Co (N:MMM) bolstering the Dow.
Advancing issues outnumbered decliners for a 7.67-to-1 ratio on the NYSE and a 5.35-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and one new low, while the Nasdaq recorded three new highs and nine new lows.