NEW YORK (AP) — U.S. stocks rallied Friday after a surprisingly strong report on the U.S. job market raised optimism about the economy.
The S&P 500 climbed 0.9% and got close to its all-time high set on Monday. The Dow Jones Industrial Average rose 341 points, or 0.8%, to set its own record, while the Nasdaq composite clambered 1.2% higher.
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FILE - Signs mark the intersection of Broadway and Wall Street in the Financial District on Oct. 2, 2024, in New York. Trinity Church is in the background. (AP Photo/Peter Morgan, File)
FILE - The entrance to the New York Stock Exchange at Wall and New Streets is shown on Oct. 2, 2024, in New York. (AP Photo/Peter Morgan, File)
FILE - People pass the New York Stock Exchange on Oct. 1, 2024, in New York. (AP Photo/Peter Morgan, File)
Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won, right, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Oct. 4, 2024. (AP Photo/Ahn Young-joon)
A currency trader watches monitors near a screen showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Oct. 4, 2024. (AP Photo/Ahn Young-joon)
Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Oct. 4, 2024. (AP Photo/Ahn Young-joon)
Leading the way were banks, airlines, cruise-ship operators and other companies whose profits can benefit the most from a stronger economy where people are working and better able to pay for things. Norwegian Cruise Line steamed 4.9% higher, JPMorgan Chase rose 3.5% and the small companies in the Russell 2000 index gained 1.5%.
They helped stock indexes claw back losses from earlier in the week, caused by worries that worsening tensions in the Middle East could lead to disruptions in the global flow of oil. Crude prices rose again Friday, but the moves were more modest than earlier in the week, as the world continued its wait to see how Israel will respond to Iran’s missile attack.
In the meantime, the strength of the U.S. economy reclaimed its spot as the top mover of markets.
Treasury yields soared in the bond market after the U.S. government said employers added 254,000 more jobs to their payrolls last month than they cut. That was an acceleration from August’s hiring pace of 159,000 and blew past economists’ forecasts.
It was a “grand slam” of a report, according to Lindsay Rosner, head of multi-sector investing within Goldman Sachs Asset Management. She said policy makers at the Federal Reserve, who have been trying to pull off the difficult feat of keeping the economy humming while getting inflation under control, “must be smiling.”
Friday’s report capped a week of mostly encouraging data on the economy, helping to allay one of Wall Street’s top questions: Can the job market continue to hold up after the Fed earlier kept interest rates at a two-decade high?
Before Friday’s jobs report, the general trend had been a slowdown in hiring by U.S. employers. That’s not surprising given how hard the Fed pressed the brakes on the economy through higher rates in order to stamp out high inflation.
But Friday’s blowout numbers bolstered hope that the U.S. economy will keep growing, particularly now that the Fed has begun cutting interest rates to give it more juice. The Fed last month lowered its main interest rate for the first time in more than four years and indicated more cuts will arrive through next year.
Friday’s jobs report was so strong that it pushed traders to abandon bets that the Fed will deliver another larger-than-usual cut to interest rates at its next meeting. They’re now forecasting zero chance for a cut of half a percentage point, according to data from CME Group. Just a week ago, they were saying it was better than a coin flip’s chance.
“This report tells the Fed that they still need to be careful as a strong labor market along with sticky housing/shelter data shows that it won’t be easy to engineer meaningfully lower inflation from here in the nearer term,” according to Scott Wren, senior global market strategist at Wells Fargo Investment Institute.
At Bank of America, economist Aditya Bhave expects the Fed to stop cutting its target for the federal funds rate when it hits a range of 3% to 3.25%. That’s a quarter of a percentage point higher than the bottom that he was earlier forecasting. The federal funds rate is currently sitting in a range of 4.75% to 5%.
Such diminished expectations for future cuts sent the yield on the two-year Treasury shooting up to 3.93% from 3.71% late Thursday. The 10-year yield jumped to 3.97% from 3.85%.
The forced rethink about how low rates will ultimately go hurt stocks of home builders, real-estate owners and other companies that benefit from easier mortgage rates.
D.R. Horton, PulteGroup and Lennar all sank at least 2.5% for three of the biggest losses in the S&P 500. Home Depot slipped 0.8% and was the biggest single reason the Dow Jones Industrial Average lagged other indexes. During the day, the Dow went from an early gain of 300 points to a modest loss and back to a big gain.
All told, the S&P 500 rose 51.13 points to 5,751.07. The Dow gained 341.16 to 42,352.75, and the Nasdaq climbed 219.37 to 18,137.85.
Also Friday, some 45,000 dockworkers at East and Gulf coast ports returned to work after their union reached a deal to suspend its three-day strike until Jan. 15 to provide time to negotiate a new contract. That helped calm worries that a lengthy strike could have pushed up on inflation and dragged on the economy.
In the oil market, the price for a barrel of Brent crude, the international standard, rose 0.6% to $78.05 per barrel to bring its gain for the week to 9.1%. A barrel of benchmark U.S. crude rose 0.9% to $74.38, up from roughly $68 at the start of the week.
In stock markets abroad, indexes rose across much of Europe following the strong jobs report from the world’s largest economy.
In Asia, Hong Kong’s Hang Seng jumped 2.8% in its latest sharp swerve. It soared a bit more than 10% over the week on excitement about a flurry of recent announcements from Beijing to prop up the world’s second-largest economy.
AP Business Writers Yuri Kageyama and Matt Ott contributed.
FILE - Signs mark the intersection of Broadway and Wall Street in the Financial District on Oct. 2, 2024, in New York. Trinity Church is in the background. (AP Photo/Peter Morgan, File)
FILE - The entrance to the New York Stock Exchange at Wall and New Streets is shown on Oct. 2, 2024, in New York. (AP Photo/Peter Morgan, File)
FILE - People pass the New York Stock Exchange on Oct. 1, 2024, in New York. (AP Photo/Peter Morgan, File)
Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won, right, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Oct. 4, 2024. (AP Photo/Ahn Young-joon)
A currency trader watches monitors near a screen showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Oct. 4, 2024. (AP Photo/Ahn Young-joon)
Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Oct. 4, 2024. (AP Photo/Ahn Young-joon)
KYIV, Ukraine (AP) — Ukraine's President Volodymyr Zelenskyy urged its allies to stop “watching” and take steps before North Koreans troops deployed in Russia reach the battlefield.
Zelenskyy raised the prospect of a preemptive Ukrainian strike on camps where the North Korean troops are being trained, and said Kyiv knows their location. But he said Ukraine can’t do it without permission from allies to use Western-made long-range weapons to hit targets deep inside Russia.
“But instead … America is watching, Britain is watching, Germany is watching. Everyone is just waiting for the North Korean military to start attacking Ukrainians as well,” Zelenskyy said in a post late Friday on the Telegram messaging app.
The Biden administration said Thursday that some 8,000 North Korean soldiers are now in Russia’s Kursk region near Ukraine’s border and are preparing to help the Kremlin fight against Ukrainian troops in the coming days.
On Saturday, Ukraine's military intelligence said that more than 7,000 North Koreans equipped with Russian gear and weapons had been transported to areas near Ukraine. The agency, known by its acronym GUR, said that North Korean troops were being trained at five locations in Russia's Far East. It did not specify its source of information.
Western leaders have described the North Korean troop deployment as a significant escalation that could also jolt relations in the Indo-Pacific region, and open the door to technology transfers from Moscow to Pyongyang that could advance the threat posed by North Korea’s nuclear weapons and missile program.
North Korean Foreign Minister Choe Son Hui met with her Russian counterpart in Moscow in Friday.
Ukrainian leaders have repeatedly said they need permission to use Western weapons to strike arms depots, airfields and military bases far from the border to motivate Russia to seek peace. In response, U.S. defense officials have argued that the missiles are limited in number, and that Ukraine is already using its own long-range drones to hit targets farther into Russia.
Moscow has also consistently signaled that it would view any such strikes as a major escalation. President Vladimir Putin warned on Sept. 12 that Russia would be “at war” with the U.S. and NATO states if they approve them.
Follow AP’s coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine
In this photo provided by Ukraine's 24th Mechanised Brigade press service, servicemen of the 24th Mechanised Brigade install anti-tank landmines and non explosive obstacles along the front line near Chasiv Yar town in Donetsk region, Ukraine, Wednesday Oct. 30, 2024. (Oleg Petrasiuk/Ukrainian 24th Mechanised Brigade via AP)
In this image made from video released by the Russian Defense Ministry on Thursday, Oct. 31, 2024, Russian snipers fire towards Ukrainian forces from an undisclosed location. (Russian Defense Ministry Press Service via AP)
In this image made from video released by the Russian Defense Ministry on Thursday, Oct. 31, 2024, Russian soldiers attend combat training for assault units at an undisclosed location in Ukraine. (Russian Defense Ministry Press Service via AP)
In this photo provided by Ukraine's 24th Mechanised Brigade press service, a serviceman of the 24th Mechanised Brigade installs landmines and non explosive obstacles along the front line near Chasiv Yar town in Donetsk region, Ukraine, Wednesday Oct. 30, 2024. (Oleg Petrasiuk/Ukrainian 24th Mechanised Brigade via AP)