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05-Jan2019

US markets end significantly higher on robust jobs data

The US markets ended higher on Friday, with gains of over 3 percent, on fresh signs of economic strength eased fears that slowing growth around the world could drag on the US expansion. Sentiment got boost on a better-than-expected jobs report for December which showed employers adding new personnel at a robust pace. The Labor Department said non-farm payroll employment soared by 312,000 jobs in December after climbing by an upwardly revised 176,000 jobs in November. Street had expected employment to increase by about 177,000 jobs compared to the addition of 155,000 jobs originally reported for the previous month.

The report also said the unemployment rate rose to 3.9% in December from 3.7% in November, while street had expected the unemployment rate to come in unchanged. However, the unexpected uptick by the unemployment rate came as the labor force jumped by 419,000 people compared to a much more modest 142,000-person increase in the household survey measure of employment. The Labor Department said average hourly employee earnings payrolls climbed by 11 cents to $27.48 in December, reflecting a 3.2% increase compared to the same month a year ago.

Adding to the optimism, Fed Chairman Jerome Powell said jobs report didn't materially increase concerns over rising inflation, while reiterating that the central bank would continue to keep an open mind about how much it will raise interest rates in 2019 and how aggressively it will shrink its balance sheet, based on incoming data about the US and global economy, including recent weakness in equity markets. The rally on Wall Street also came after China's Commerce Ministry said China and the US would hold vice ministerial level trade talks in Beijing next week.

Dow Jones Industrial Average jumped 746.94 points or 3.29 percent to 23433.16, Nasdaq surged 275.35 points or 4.26 percent to 6738.86 and S&P 500 was up by 84.05 points or 3.43 percent to 2531.94.


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