Stocks Rally as Traders Cheer U.S. Economic Data: Markets Wrap

(Bloomberg) -- Stocks rallied around the globe and Treasuries fell as better-than-expected data bolstered confidence in the world’s largest economy.

The S&P 500 Index extended its advance into a third day after reports showed payrolls jumped 266,000 -- the most since January -- as wages beat estimates while consumer sentiment increased. Energy, financial and industrial shares led gains in the equity gauge, which posted its biggest rally in five weeks. The dollar rose, and Treasury 10-year yields traded above 1.8%. Oil surged.

Investors pushed up the value of risk assets on the assumption that the American economy isn’t close to signaling a recession -- a fear that’s been lurking amid a trade war. While negotiators are near phase one of a broader accord and “progress has been made,” they haven’t yet put anything in writing, said White House economic adviser Larry Kudlow. Strong economic reports may reduce the urgency for a deal, given that escalating levies have failed to significantly dent growth. They also validate Federal Reserve Chairman Jerome Powell’s view that rates can stay on hold after three cuts.

“For the equity market, it provides some encouragement that the U.S. is certainly not heading for a hard landing,” said James McCann, senior global economist at Aberdeen Standard Investments. “As we head into next year, the prospect for earnings still remains pretty healthy based on a still well-supported consumer backdrop.”

Read: Wall Street Scraps Recession Assumptions After Robust Jobs Data

Stocks got whipsawed this week on conflicting signs of progress in trade negotiations between the world’s two largest economies. China said Friday it’s in the process of waiving retaliatory tariffs on imports of U.S. pork and soy by domestic companies -- a procedural step that may also signal a broader trade agreement is drawing closer. President Donald Trump has threatened to impose tariffs on Chinese imports if an accord isn’t reached by Dec. 15, which Kudlow said could still happen.

Elsewhere, oil climbed after Saudi Arabia surprised the market by promising significant additional production cuts beyond what was agreed with fellow OPEC+ members. The euro fell after data showed Germany’s industrial slump unexpectedly deepened in October.

Some corporate highlights:

• Apple Inc. jumped to a record high.
• Big Lots Inc. soared on its bullish view for next year.
• Ulta Beauty Inc. surged after delivering what analysts called “better-than-feared” results.
• Ciena Corp. tumbled after UBS recommended selling the stock ahead of next week’s earnings.

These are some of the main moves in markets:

Stocks

• The S&P 500 climbed 0.9% to 3,145.91 at 4 p.m. New York time.
• The Stoxx Europe 600 Index increased 1.2%.
• The MSCI Asia Pacific Index rose 0.5%.

Currencies

• The Bloomberg Dollar Spot Index added 0.1%.
• The euro dipped 0.4% to $1.106.
• The Japanese yen appreciated 0.2% to 108.55 per dollar.

Bonds

• The yield on 10-year Treasuries rose three basis points to 1.84%.
• Germany’s 10-year yield climbed one basis point to -0.29%.
• Britain’s 10-year yield fell less than one basis point to 0.772%.

Commodities

• The Bloomberg Commodity Index added 0.2%.
• West Texas Intermediate crude climbed 1.3% to $59.20 a barrel.
• Gold declined 1.2% to $1,465.10 an ounce.

--With assistance from Cormac Mullen, Eddie van der Walt, Sam Potter and Yakob Peterseil.

To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Rita Nazareth

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