Stocks climbed Friday after a report showed the U.S. jobs market is still growing enough for the unemployment rate to drop to a five-decade low.
The report gave some reassurance after a rough week dominated by surprisingly weak numbers on U.S. manufacturing and services activity, which raised recession worries and sent the S&P 500 to its first back-to-back losses of 1% this year. The index is still on track for its third straight weekly decline.
Employers added 136,000 jobs last month, slightly less than the 145,000 that economists had been expecting and below the 168,000 pace from August, a fresh sign that job growth is solid but slowing. Workers’ wages were also weaker than expected, with zero growth from a month before. On the encouraging side, the government said hiring in prior months was stronger than earlier estimated, and the unemployment rate dropped to 3.5% from 3.7%.
“While the bears may take this as a further confirmation of a slower economy, it is actually a pretty strong read, especially when you factor in previous revisions” said Mike Loewengart, vice president of investment strategy at E-Trade Financial.
If the job market can remain strong, it would allow U.S. households to keep spending. And that spending strength has been the hero for the economy recently, propping it up when slowing growth abroad poses a threat and President Donald Trump’s trade war with China saps exports and manufacturing.
Stock markets around the world rose following the release of the report, and gold dipped as investors felt less need for safety.
KEEPING SCORE: The S&P 500 was up 0.9% as of noon Eastern time, after gains accelerated through the morning. But the index remains down 0.8% for the week.
The Dow Jones Industrial Average climbed 220 points, or 0.8%, to 26,421, and the Nasdaq composite gained 1%.
ECONOMIC CHECK: Anticipation built through the week for Friday’s jobs report as a parade of weak data on the economy shook markets around the world. U.S. manufacturing activity contracted last month at its sharpest pace in a decade, and growth in the nation’s services sector slowed.
Friday’s mixed report shows a jobs market that is slowing but still growing, and economists said it could signal that a rate cut at the Federal Reserve’s meeting later this month is no longer a slam dunk. The Fed has already cut rates twice this year to shield the economy from the effects of slowing growth abroad and the U.S.-China trade war.
The yield on the 10-year Treasury dipped to 1.52% from 1.53% late Thursday. The two-year yield, which moves more on expectations about Fed activity, rose to 1.40% from 1.37%.
FINE CHINA: The world’s two largest economies are set to talk again next week about trade. Markets have been quick to swing on any hint of movement in their dispute, which has dragged on manufacturing around the world and pushed CEOs to delay investments given all the uncertainty.
Trump said Friday that his call for China to investigate former Vice President Joe Biden will have no bearing on the upcoming talks. He also said he believes China wants to make a deal.
SHINED UP: Apple helped drive the market higher after rising 2.3%. A Japanese newspaper, Nikkei, said that the company asked suppliers to boost production of its iPhone 11.
Moves in Apple’s stock have an outsized effect on the S&P 500 because it’s the second-largest constituent in the index by market size.
MARKETS ABROAD: European stock markets turned higher following the release of the U.S. jobs report, and the French CAC 40 gained 0.7%. The German DAX added 0.6%, and the FTSE 100 in London rose 1 %.
In Asia, Tokyo’s Nikkei 225 added 0.3%, while Hong Kong’s Hang Seng tumbled 1.1% and Seoul’s Kospi fell 0.6%.
COMMODITIES: Crude oil recovered some of its sharp losses from earlier in the week, which were spurred by worries about weakening demand and growing supplies.
Benchmark U.S. crude rose 43 cents to $52.88 per barrel. It started the week at $55.91. Brent crude, the international standard, gained 73 cents to $58.44 per barrel.
Gold gave back some of its big gains from earlier in the week and slipped $3.40 to $1,510.40 per ounce.