U.S. Stocks Climb on Strong Jobs Report; Inflation Fears Ease

stocks, markets, wall street, s&p, dow

U.S. stocks are climbing Friday on the back of strong jobs figures, while investor concerns about rising inflation eased as wage growth slowed slightly. Technology companies are climbing and banks are rising in tandem with interest rates. 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 advanced 27 points, or 1 percent, to 2,766 as of 11:10 a.m. Eastern time. The Dow Jones Industrial Average rose 259 points, or 1 percent, 25,046. The Nasdaq composite jumped 80 points, or 1.1 percent, to 7,508. That put the technology-heavy index on pace for a record high after recovering its steep losses from early February.

The Russell 2000 index of smaller-company stocks picked up 13 points, or 0.9 percent, to 1,585.

JOBS: U.S. employers added 313,000 jobs in February, more than experts had expected. Perhaps more importantly for Wall Street, wages didn’t rise as much as investors had feared. 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 $1.88, or 1 percent, to $184.22, and Google’s parent company Alphabet added $13.97, or 1.2 percent, to $1,143.35.

Bond prices dropped. The yield on the 10-year Treasury note rose to 2.91 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 $2.03, or 1.8 percent, to $116.77, and Capital One Financial gained $1.50, or 1.5 percent, to $99.65.

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 FOR TOYS: Toymakers fell after reports 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 $3.31, or 3.6 percent, to $90.07, while Mattel sank 96 cents, or 6 percent, to $15.01.

TARIFF IMPACT: After a week of trying to determine the impact U.S. tariffs on imported steel and aluminum would have, markets largely brushed aside confirmation that Trump was going ahead with his plan. Now, investors are wondering what countries will ultimately be hit the hardest. Trump has said Canada and Mexico will be exempted. The EU is looking to be exempted, too, but has said it will retaliate if its exports are hit with tariffs.

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 an 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 0.3 percent while Germany’s DAX fell 0.1 percent. The FTSE 100 in Britain rose 0.1 percent.

ENERGY: Benchmark U.S. crude added $1.06, or 1.8 percent, to $61.18 a barrel in New York, while Brent crude, used to price international oils, rose $1.08, or 1.7 percent, to $64.69 a barrel in London.

That helped energy companies. Chevron jumped $2.09, or 1.8 percent, to $115.44, and Schlumberger gained $2.03, or 3 percent, to $68.77.

CURRENCY: The dollar rose to 106.96 yen from 106.24 yen. The euro rose to $1.2322 from $1.2306.