Wall St rallies as jobs, services data calm rate hike worries

Wall Street’s main indexes all gained more than 2% on Friday after December payrolls expanded more than expected even as wage increases slowed and services activity contracted, easing worries about the Federal Reserve’s interest rate hiking path, Reuters reported.

U.S. nonfarm payrolls rose by 223,000 jobs in December, Labor Department data showed, while a 0.3% rise in average earnings was smaller than expected and less than the previous month’s 0.4%.

In another set of data, U.S. services activity declined for the first time in more than 2-1/2 years in December as demand weakened, with more signs of inflation easing.

By 4:23 p.m. ET, the Dow Jones Industrial Average rose 700.53 points, or 2.13%, to 33,630.61; the S&P 500 gained 86.98 points, or 2.28%, at 3,895.08; and the Nasdaq Composite added 264.05 points, or 2.56%, at 10,569.29.

Friday’s rally boosted the benchmark S&P and the Nasdaq enough to snap four weeks of declines. For the holiday-shortened week, the S&P rose 1.45% while the Nasdaq added 0.98% and the Dow advanced by 1.46%.

For the gains, John Augustine, chief investment officer at Huntington National Bank in Columbus, Ohio, pointed to a calming of anxiety that the Fed would raise rates so much that it causes a recession.

Still the Fed last month projected an a interest rate target peak of around 5% and said it would keep rates high until inflation is where it wants it to be.

All the major S&P 500 indexes gained with materials’ 3.44% increase leading the pack. Interest-rate sensitive technology was next with a 2.99% gain.

The weakest sector was healthcare, which rose 0.89% followed by energy’s 1.68% increase.

Consumer staples was boosted by Costco Wholesale Corp, whose shares jumped 7% after the membership-only retailer reported strong December sales growth.

Shares in Biogen Inc closed up 2.8% after the U.S. Food and Drug Administration on Friday approved the Alzheimer’s drug lecanemab developed by Eisai Co Ltd and Biogen for patients in the earliest stages of the disease. Eisai’s U.S. shares closed up 4% at $64.20.

Pfizer Inc shares advanced 2.5% after reports of talks with China to secure a license that will allow domestic drugmakers to manufacture and distribute a generic version of the U.S. company’s COVID-19 antiviral drug Paxlovid in China.

Bed Bath & Beyond Inc tumbled 22% after Reuters reported that the home goods retailer was preparing to seek bankruptcy protection in coming weeks.

Advancing issues outnumbered decliners on the NYSE by a 6.69-to-1 ratio; on Nasdaq, a 2.59-to-1 ratio favored advancers.

The S&P 500 posted 18 new 52-week highs and five new lows; the Nasdaq Composite recorded 97 new highs and 65 new lows.

On U.S. exchanges 11.15 billion shares changed hands compared with the 10.84 billion average for the full session over the last 20 trading days.