Wall Street stocks rally after hotter-than-expected jobs report

U.S. stocks gained and the dollar fell on Friday after a key report showed the economy added more jobs than expected last month, adding to pressure on the Federal Reserve to maintain its aggressive stance on the ‘inflation.

The blue-chip S&P 500 jumped 0.9%, while the tech-heavy Nasdaq Composite rose 0.6%. In Europe, the regional Stoxx Europe 600 index gained 2.3%, recouping the 0.9% loss it suffered in the previous session.

The US dollar index, which tracks the currency against six major peers, fell 1.5%. The move came after comments from US central bankers Thomas Barkin and Susan Collins, which implied the Fed was about to slow the pace at which it is raising borrowing costs.

The United States added 261,000 jobs in October, according to the Labor Department, ahead of a consensus estimate of 200,000 compiled by Bloomberg. The jobless rate rose 0.2 percentage points to 3.7% in October, higher than the 3.6% forecast.

Wages, meanwhile, rose 0.4% from the previous month, according to the report, which is higher than the 0.3% increase expected.

Antoine Bouvet, senior rates strategist at ING, said Fed Chairman Jay Powell’s “hawkish turn” earlier in the week made sense given the high level of inflation, Friday’s jobs data providing an additional justification: “It’s the icing on the cake”.

But Quincy Krosby, chief global strategist at LPL Financial, said the jobs report bolstered the case for a 0.5 percentage point lower rise at the December Fed meeting and was “helping the stock market” as higher unemployment figures meant payroll figures were “coming down but not”. collapseā€.

The Fed implemented its fourth consecutive 0.75 percentage point hike on Wednesday as it tried to bring inflation back to its 2% target. Powell’s warning that recent data suggests “the ultimate level of interest rates will be higher than expected” sent US stocks tumbling and leading to a sharp rise in short-term US government bond yields.

The two-year Treasury yield, which is particularly sensitive to short-term monetary policy expectations, fell from its peak on Thursday, when it hit its highest level since mid-2007. The yield on the note fell 0.02 percentage points to 4.68% on Friday. Yields rise when prices fall.

The 10-year US Treasury yield rose 0.03 percentage points to 4.15%. Longer-term debt normally yields more than short-term notes and so-called yield curve inversions have preceded every US recession in the past 50 years.

Chinese stocks soared, extending their weekly gains on hopes that Beijing would alter its longstanding zero-Covid policy. The CSI 300 index of stocks listed in Shanghai and Shenzhen gained 3.3%.

It also boosted earnings at mining groups Anglo American, up 7.4%, and Rio Tinto, up 8.2% in London. The FTSE 100 rose 2.3%.

Reports that US regulators had completed a review of Chinese audit reports ahead of schedule boosted investor optimism about Chinese stocks, with the Hang Seng in Hong Kong closing up 5.4% .

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