BCN-07 Dow ends up 3.3% as US stocks rally on jobs data, dovish Fed

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BCN-07

US-STOCKS-MARKETS

Dow ends up 3.3% as US stocks rally on jobs data, dovish Fed

NEW YORK, Jan 5, 2019 (BSS/AFP) – Wall Street stocks surged higher on
Friday to finish a volatile week on an upbeat note following dovish Federal
Reserve comments and a strong US jobs report.

The Dow Jones Industrial Average climbed 3.3 percent, or nearly 750
points, to end the week at 23,433.16.

The broad-based S&P 500 jumped 3.4 percent to 2,531.95, while the tech-
rich Nasdaq Composite Index advanced 4.3 percent to 6,738.86.

The rally more than made up for blistering losses on Thursday, when the
Dow shed 2.8 percent after Apple slashed its revenue forecast on weak demand
in China and a US report showed manufacturing activity slumping to a two-year
low.

On Friday, the Labor Department reported the US added 312,000 jobs in
December, much above analyst expectations. The figures strengthened the case
of those who have argued that markets have overreacted to signs that US
growth may have peaked.

Stocks rallied further after Fed Chair Jerome Powell told a gathering of
economists that the US central bank had no “pre-set” plan for interest rates
and was carefully monitoring economic conditions.

“Markets are expressing concerns about global growth in particular and
trade negotiations,” Powell said.

“We’re listening with — sensitively to the message that markets are
sending and we’ll be taking those downside risks into account as we make
policy going forward.”

Powell’s remarks reassured investors who have worried the Fed might raise
rates excessively, but Jason Schenker of Prestige Economics suggested the Fed
could.

“Despite this dovish tone, we are skeptical,” Schenker said in a note.
“The Fed has willfully ignored trade and interest rate risks while talking a
hawkish game.”

Many analysts are girding for a rocky year for markets, owing to the US-
China trade war and other unresolved matters, including a government shutdown
fight in Washington that President Donald Trump warned Friday could last
years as he battles for funding for a border wall with Mexico.

Stocks could be further pressured when companies report quarterly earnings
later this month, according to DataTrek Research Co-Founder Nicholas Colas.

“The upcoming earnings season will likely see managements reset 2019
earnings expectations to something close to flat versus 2018,” said Colas in
note on Friday, adding that stocks could push higher in the year even if
January is a month of losses.

BSS/AFP/HR/0940