US stocks rose and the dollar fell on Friday after a key report showed the economy added more jobs than expected last month, increasing pressure on the Federal Reserve to maintain its aggressive stance on inflation.
The blue chip S&P 500 jumped 0.9 percent, while the tech-heavy Nasdaq Composite rallied 0.6 percent. In Europe, the regional Stoxx Europe 600 added 2.3 percent, recouping the 0.9 percent loss it made in the previous session.
The US dollar index, which tracks the currency against six major pairs, fell 1.5 percent. The move came after comments from US central bankers Thomas Barkin and Susan Collins that implied the Fed was close to slowing the rate at which it raises 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 increased by 0.2 percentage point to 3.7 percent in October, higher than the forecast 3.6 percent.
Wages, meanwhile, rose 0.4 percent from a month earlier, the report showed, more than the 0.3 percent rise forecast.
Antoine Bouvet, senior rate strategist at ING, said Fed Chairman Jay Powell’s “aggressive pivot” earlier in the week it made sense given how high inflation remains, and Friday’s jobs data provided further vindication: “It’s icing on the cake.”
But Quincy Krosby, chief global strategist at LPL Financial, said the jobs report bolstered the case for a smaller 0.5 percentage point increase at the Fed’s December meeting and “helped the stock market” because the numbers Higher unemployment rates implied that payroll figures are “sliding down but not collapsing.”
The Fed implemented its fourth straight rate hike of 0.75 percentage point on Wednesday in a bid to bring inflation down to its 2 percent target. Powell’s warning that recent data suggests “the final level of interest rates will be higher than expected” sent US stocks lower and led to a sharp rise in government bond yields. US short term
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 point percentage to reach 4.68 percent on Friday. Yields rise when prices fall.
The 10-year US Treasury yield gained 0.03 percentage point to 4.15 percent. Longer-term debt typically outperforms short-term notes, and so-called yield curve inversions have preceded every American recession for the past 50 years.
Chinese stocks soared, extending their weekly gains on hopes Beijing will change its long-standing zero-Covid policy. The CSI 300 index of shares listed in Shanghai and Shenzhen gained 3.3 percent.
That also boosted gains for mining groups Anglo American, up 7.4%, and Rio Tinto, up 8.2% in London. The FTSE 100 rose 2.3 percent.
Reports that US regulators had completed a review of Chinese audit reports earlier than expected raised investor optimism for Chinese stocks, with the Hang Seng in Hong Kong closing up 5.4 percent.
