US Stocks Climb On Strong Jobs Report; Inflation Fears Ease
NEW YORK (AP) — U.S. stocks are rising sharply Friday following strong jobs figures, while investor concerns about inflation eased as wage growth slowed down slightly. Technology companies are climbing and banks are rising in tandem with interest rates. Industrial companies are rallying as well. Investors also digested President Donald Trump's announcement of new tariffs on steel and aluminum imports and news that Trump plans to meet with North Korean leader Kim Jong Un.
KEEPING SCORE: The S&P 500 index climbed 24 points, or 1.2 percent, to 2,773 as of 1 p.m. Eastern time. The Dow Jones industrial average rose 340 points, or 1.4 percent, 25,237. The Russell 2000 index of smaller-company stocks picked up 20 points, or 1.3 percent, to 1,592.
The Nasdaq composite jumped 101 points, or 1.4 percent, to 7,529. Technology companies have led the way as stocks recovered from their early February plunge, and the Nasdaq has regained all of its losses and is on track for a record close. The S&P 500 is still about 3.5 percent below its highest close, which came on Jan. 26.
JOBS: U.S. employers added 313,000 jobs in February. Perhaps more importantly for Wall Street, wages didn't rise as much as investors had fared. Hourly wages grew 2.6 percent compared to a year ago. A month ago the government reported that wages jumped 2.9 percent in January, and investors worried that that was a sign inflation was going to start rising at a faster pace. If so, the Federal Reserve would likely raise interest rates more rapidly in response, which could slow down economic growth.
Katie Nixon, chief investment officer for Northern Trust Wealth Management, said the combination of strong job gains and a slightly slower increase in pay was exactly what Wall Street wanted.
"I think the fears of wages getting out of control in this point in the cycle … were squashed," she said.
MARKET REACTION: Technology companies made some of the largest gains. Facebook rose $2.86, or 1.6 percent, to $185.29 and Google's parent company Alphabet added $20.57, or 1.8 percent, to $1,149.95. Among industrials, farm equipment maker Deere jumped $6.08, or 3.8 percent, to $167.14 and railroad operator Union Pacific gained $3.60, or 2.7 percent, to $135.88.
Bond prices dropped. The yield on the 10-year Treasury note rose to 2.89 percent from 2.85 percent. That helps banks, because it allows them to charge higher interest rates on mortgages and other kinds of loans. JPMorgan Chase rose $2.81, or 2.4 percent, to $117.55 and Capital One Financial gained $1.91, or 1.9 percent, to $100.06.
High-dividend stocks like utilities and phone companies fell. Those stocks are often compared to bonds and they tend to fall when yields move higher, as higher yields make them less appealing to investors seeking income.
BAD NEWS, GEOFFREY: Toymakers fell after Reuters reported that Toys R Us is getting ready to liquidate its U.S. operations. Reuters said the chain, which filed for bankruptcy protection, has been unable to find a buyer or restructure its debt. Despite its struggles, it's still a major retailer of toys. Hasbro dropped $2.52, or 2.7 percent, to $90.86 while Mattel sank $1.01, or 6.3 percent, to $14.96.
TARIFF IMPACT: Stocks slumped this month after Trump said he would place tariffs on imported steel and aluminum, but they've recovered some of their losses after he granted exemptions to Canada, Mexico, and potentially other countries.
Nixon said the administration appears to be setting itself up to take a harder line in China. While China isn't a major exporter of steel to the U.S., trade disputes between the two countries aren't uncommon and the government is currently investigating China's treatment of intellectual property held by U.S. companies.
"Clearly the target here is China and how that unfolds will be important for markets," Nixon said. "The collateral damage could be relatively wide unless it's done carefully, and so far the process has not been very careful."
NORTH KOREA: Trump agreed to meet with North Korean leader Kim Jong Un by May to negotiate a potential end to Pyongyang's nuclear weapons program, South Korean and U.S. officials said Thursday. No American president has ever met with a North Korean leader while in office. The news helped send South Korea's Kospi up 1.1 percent.
Other Asian indexes also rose. Japan's benchmark Nikkei 225 gained 0.5 percent and. Hong Kong's Hang Seng also rose 1.1 percent.
In Europe, France's CAC 40 rose 0.4 percent while Germany's DAX fell 0.1 percent. The FTSE 100 in Britain rose 0.3 percent.
BARACK BOOST: Netflix rose after the New York Times reported that the streaming service is negotiating with Barack Obama to have the former president and his wife Michelle produce shows. The two sides haven't confirmed that they are in talks. GBH Insights analyst Daniel Ives said a deal with the Obamas would be "another major win for Netflix" as it tries to launch more and more original shows.
ENERGY: Benchmark U.S. crude added $1.70 or 2.8 percent, to $61.82 a barrel in New York, while Brent crude, used to price international oils, rose $1.53, or 2.4 percent, to $65.14 a barrel in London.
That helped energy companies. Chevron jumped $3.10, or 2.7 percent, to $116.45 and Schlumberger gained $1.86, or 2.8 percent, to $68.60.
CURRENCY: The dollar rose to 106.68 yen from 106.24 yen. The euro rose to $1.2321 from $1.2306.
-by AP reporter Marley Jay