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US stocks surge on upbeat jobs report

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US stocks ended sharply higher Friday after a strong jobs report fuelled expectations that the Federal Reserve will begin to reduce its huge stimulus soon.

The Dow Jones Industrial Average gained a hefty 198.69 points (1.26 per cent) at 16,020.20.

The broad-based S&P 500 advanced 20.06 (1.12 per cent) to 1,805.09, while the tech-rich Nasdaq Composite Index jumped 29.36 (0.73 per cent) to 4,062.52.

The Dow and the S&P 500 solidly snapped a five-session losing streak. Wall Street rallied from the opening bell after a better-than-expected November jobs report from the Labor Department.

The US jobless rate dropped to 7.0 per cent, a five-year low, from 7.3 per cent in October, and the economy added 203,000 jobs.

Analysts said the strength of the Labor Department report could encourage the Fed to begin cutting back its $85 billion a month in bond purchases, aimed at boosting economic growth

“Markets like this report because it indicates the risk of disinflation or deflation is diminishing,” said David Kotok of Cumberland Advisors.

The Commerce Department reported consumers picked up their pace of spending in October, a key driver of economic growth. Meanwhile inflation fell for the third consecutive month, to a yearly rate of 0.7 per cent, well below the Fed’s preferred 2.0 per cent target.

Adding to the overall bullishness, the University of Michigan’s consumer confidence index jumped much more than expected in December.

All 30 stocks on the blue-chip Dow ended solidly in positive territory, led by Intel, up 2.3 per cent, DuPont (+2.2 per cent), and Boeing and General Electric, each up 1.9 per cent.

In corporate news, retailer Sears shed 3.8 per cent after announcing plans to spin off its Lands’ End clothing business, subject to shareholder approval.

Ulta Salon, Cosmetics & Fragrance plunged 20.5 per cent after a disappointing fiscal third-quarter earnings report showed a decline in same-store sales.

Tech giant Google rose 1.2 per cent to a record-high close at $1,069.87 on the Nasdaq.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.88 per cent from 2.86 per cent from Thursday, while the 30-year rose to 3.92 per cent from 3.91 per cent. Bond prices and yields move inversely.