US stocks staged their first notable rally of 2023 to end the week higher on Friday after December jobs data showed wage growth had slowed over the past month. Investors took the release as a sign that Federal Reserve officials might be easing their rate hike campaign.
The S&P 500 (^GSPC) rose 2.3%, while the Dow Jones Industrial Average (^DJI) gained 700 points, or 2.1%. The tech-heavy Nasdaq Composite (^IXIC) rose 2.6%. All three major averages were about to end the week in losses ahead of Friday’s big gains.
The latest 2022 jobs report from the Department of Labor showed that the US economy added 223,000 jobs over the past month, while the unemployment rate has fallen to 3.5%. Economists had expected readings of 200,000 and 3.7% respectively.
Employment has weakened in recent months, but hiring remains significant despite the Federal Reserve’s efforts to quell a tight labor market that has put upward pressure on wages and contributed to stubborn inflation.
“With more than 1.8 job vacancies for every unemployed person, investors should expect higher interest rates longer after today’s release,” Ron Temple, Lazard’s chief market strategist, said in a statement. “As long as the labor market remains tight, the Fed cannot be sure that inflation will return to its 2% target.”
Meanwhile, the ISM non-manufacturing PMI fell below the 50 line for the first time since the pandemic began two years ago. The US services activity gauge fell to 49.6 last month from 56.5 in November . Economists polled by Bloomberg were expecting a reading of 55.0.
Troubled Tesla (TSLA) was down as much as 7% at the start of the session after the electric carmaker slashed prices in China following a drop in shipments in December. Shares closed down 2.5%.
The starting price for the Model 3 has been slashed to 229,000 yuan, or around $33,000, while the Model Y has been priced down to 259,900 yuan, or $37,886, according to Tesla’s website.
The story goes on
Elsewhere, shares of World Wrestling Entertainment (WWE) rose 16.8% after The Wall Street Journal reported that former CEO Vince McMahon will return to explore a sale of the company. McMahon retired in July 2022 following a misconduct investigation.
Bed Bath & Beyond (BBBY) tumbled another 22.5% on Friday after it issued a statement the day before saying the company was considering bankruptcy as it ran out of cash. Shares fell 30% on Thursday following the announcement.
Costco (COST) stock gained 7.3%, rebounding from a six-month low after the wholesaler released upbeat December sales data. Revenue for the past month was $23.8 billion, up 7% year over year, while total comparable store sales rose 5.5%, beating analysts’ expectations of 5%. Costco was named Company of the Year by Yahoo Finance.
Finally, shares of Biogen (BIIB) closed 2.8% higher after the FDA granted the biotech and its partner, Japan-based Eisai, accelerated approval for their new Alzheimer’s drug. Trading was briefly suspended due to upcoming news.
In commodity markets, oil prices rebounded Friday morning after a dismal start to the year that saw crude oil futures fall as much as 10% this week. West Texas Intermediate (WTI) Crude Oil, the US benchmark, closed at $73.69.
A trader works on the trading floor of the New York Stock Exchange (NYSE) in New York City, U.S. January 5, 2023. Portal/Andrew Kelly
Outside of the monthly jobs report, a number of other jobs updates this week suggested that hiring remains strong and job vacancies remain high. For investors, the numbers suggest labor conditions remain tight enough for the Federal Reserve to continue raising interest rates and dumping stocks.
In the previous trading session, all three major moving averages fell more than 1% after the ADP National Employment Report showed private payrolls rose 235,000 jobs in December, while jobless claims fell to their lowest level since September.
“Last year it was the Fed against the markets — they needed valuations to fall, they wanted stocks to fall, they wanted bonds to fall, they wanted house prices to fall — they got that,” David Waddell, CEO of the eponymous firm, Waddell and Associates, told Yahoo Finance Live on Wednesday. “This year it’s going to be the Fed against the employers, and what the Fed has said to the employers is, ‘We’re not going to stop until you lay off two million people.'”
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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