US Stocks Rally After Jobs Report

Stocks finish sharply higher after January jobs report beats estimates.

US stocks advanced sharply on Friday after stronger than expected jobs data raised optimism about the health of the domestic economy.

The large-cap S&P 500 Index (NYSEARCA:SPY) rose 0.7% to settle near all-time highs at 2,297.42. The benchmark gauge finished slightly higher for the week.

Ten of 11 S&P sectors finished in positive territory on Friday. Financial shares led the gains, rising 2%. Consumer staples were up 0.5% and energy added 0.9%.

Consumer discretionary was the lone sector to finish lower on Friday, although losses were limited to just 0.1%.

The Dow Jones Industrial Average (NYSEARCA:DIA) climbed 0.9% to 20,071.46. The blue-chip average had traded below 20,000 throughout the week.

Meanwhile, the technology-heavy Nasdaq Composite Index (NYSEARCA:QQQ) rose 0.5% to end at 5,666.77.

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A measure of implied volatility known as the CBOE VIX (NYSEARCA:VXX) plunged 8.1% to 10.97, on a scale of 1-100 where readings below 20 represent below-average volatility. Relative strength has fallen sharply below 50 and is approaching the more bearish 40 region.

The Labor Department reported Friday that employers added 227,000 workers to payrolls last month, far exceeding the 175,000 increase forecast by economists. The unemployment rate ticked up to 4.8% as workforce participation increased.

However, the numbers weren’t entirely positive.  Average hourly earnings rose just 0.1% in January, which translated into a year-over-year gain of 2.5%. Wages rose at an annualized 2.9% in December.

The nonfarm payrolls report generated only modest gains for the US dollar, which is mired in a prolonged downtrend. The dollar index edged up 0.1% to 99.88 on Friday.

The Final Word: Strong jobs data will only strengthens the Federal Reserve’s case to continue raising interest rates thus year. The Fed remained on the sidelines this week, but is expected to continue hiking rates in the summer.