After fluctuating early in the session, stocks have moved sharply higher over the course of morning trading on Friday. The major averages have shown a strong move back to the upside following the significant pullback seen in the previous session.
Currently, the major averages are just off their highs of the session. The Dow is up 475.05 points or 1.4 percent at 33,405.13, the Nasdaq is up 117.54 points or 1.1 percent at 10,422.78 and the S&P 500 is up 50.23 points or 1.3 percent at 3,858.33.
The rally on Wall Street comes following the release of a report from the Institute for Supply Management showing U.S. service sector activity unexpectedly contracted in the month of December.
The ISM said its services PMI tumbled to 49.6 in December from 56.5 in November, with a reading below 50 indicating a contraction. Economists had expected the index to edge down to 55.0.
With the much bigger than expected decrease, the index indicated a contraction for the first time since May 2020, when it hit 45.2.
Traders seem optimistic the weaker than expected reading on service sector activity will convince the Federal Reserve to continue to slow their aggressive pace on interest rate hikes.
The volatility seen early in the session came after a closely watched Labor Department report showing employment in the U.S. increased by slightly more than expected in the month of December.
The report said non-farm payroll employment jumped by 223,000 jobs in December after surging by a revised 256,000 jobs in November.
Economists had expected employment to shoot up by 200,000 jobs compared to the addition of 263,000 jobs originally reported for the previous month.
The Labor Department also said the unemployment rate edged down to 3.5 percent in December from a revised 3.6 percent in November.
The unemployment rate was expected to come in unchanged compared to the 3.7 percent originally reported for the previous month.
Steel stocks have shown a substantial move to the upside on the day, driving the NYSE Arca Steel Index up by 3.8 percent to a seven-month intraday high.
An extended rebound by the price of crude oil has also contributed to considerable strength among energy stocks, with the Philadelphia Oil Service Index and the NYSE Arca Oil index surging by 3.6 percent and 2.7 percent, respectively.
Gold, utilities, chemical and transportation stocks have also moved notably higher amid broad based buying interest on Wall Street.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index climbed by 0.6 percent, while China’s Shanghai Composite Index inched up by 0.1 percent.
The major European markets have also moved to the upside on the day. While the French CAC 40 Index had jumped by 1.0 percent, the U.K.’s FTSE 100 Index is up by 0.7 percent and the German DAX Index is up by 0.5 percent.
In the bond market, treasuries have moved sharply higher following the weaker than expected service sector reading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 12.9 basis points at 3.591 percent.
Source: Read Full Article