By Stephen Culp
NEW YORK (Reuters) – Wall Street and European stocks surged and the dollar lost ground on Friday as investor appetite for risk was revived by a strong U.S. employment report and signs China is open to tariff negotiations.
All three major U.S. stock indexes were sharply higher, with economically sensitive financials, transports and microchips outperforming the broader market.
The S&P 500 and the Nasdaq are on track to be essentially unchanged on the week, while the blue-chip Dow has set course for a modest weekly gain.
The U.S. economy added more jobs than expected last month and wage inflation came in below consensus, according to the Labor Department, prompting a jump in benchmark U.S. Treasury yields.
Beijing is “evaluating” Washington’s offer to hold talks over U.S. President Donald Trump’s crushing tariffs, China’s Commerce Ministry said, signaling a potential de-escalation of the market-rattling trade war.
“There was really not anything not to like about the jobs data; it indicates that the economy is doing just fine,” said Paul Nolte, senior wealth advisor & market strategist at Murphy & Sylvest in Elmhurst, Illinois. “There are still discussions about the impacts of tariffs, but so far at least, that data has not shown up in a lot of the numbers.”
“The fact that China is willing to come to the table is encouraging,” Nolte added. “But right now, it’s talk. Let’s see what happens next.”
Lack of clarity regarding U.S.-China trade duties has contributed to a marked deterioration in U.S. businesses’ long-term outlooks, the latest round of quarterly earnings results has shown.
Apple and Amazon.com reported quarterly earnings late Thursday with disappointing forecasts, including Apple’s estimated $900 million in tariff costs. The reports took some wind from the sails of the “magnificent seven” group of artificial intelligence-related megacap stocks, which had enjoyed a rebound this week.
General Motors warned of a $4-$5 billion hit to earnings and American Airlines withdrew profit forecasts.
The Dow Jones Industrial Average rose 422.95 points, or 1.04%, to 41,175.91, the S&P 500 rose 65.11 points, or 1.16%, to 5,669.25 and the Nasdaq Composite rose 220.24 points, or 1.24%, to 17,930.98.
European shares surged as revived hopes of Sino-U.S. trade negotiations fed investor risk appetite.
MSCI’s gauge of stocks across the globe rose 12.43 points, or 1.49%, to 847.58.
The pan-European STOXX 600 index rose 1.68%, while Europe’s broad FTSEurofirst 300 index rose 36.24 points, or 1.73%.
Emerging market stocks rose 24.83 points, or 2.23%, to 1,136.80. MSCI’s broadest index of Asia-Pacific shares outside Japan closed higher by 2.54%, to 595.66, while Japan’s Nikkei rose 378.39 points, or 1.04%, to 36,830.69.
Treasury yields rose as the strong employment data led investors to pare bets on a Federal Reserve rate cut in June.
Treasuries also came under pressure from fears of Japan leveraging its massive U.S. debt holdings as a negotiating tool in trade talks.
The yield on benchmark U.S. 10-year notes rose 6.6 basis points to 4.297%, from 4.231% late on Thursday.
The 30-year bond yield rose 4.4 basis points to 4.7809% from 4.737% late on Thursday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Fed, rose 8.8 basis points to 3.789%, from 3.701% late on Thursday.
The dollar extended its losses in the wake of the upbeat U.S. jobs report.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.59% to 99.55, with the euro up 0.61% at $1.136.
Against the Japanese yen, the dollar weakened 0.89% to 144.13.
Crude extended its slide as investors positioned themselves ahead of an expected decision by OPEC+ to boost output.
U.S. crude fell 1.55% to $58.32 a barrel and Brent fell to $61.26 per barrel, down 1.4% on the day.
Gold prices firmed but were headed for a weekly loss amid easing trade tensions.
Spot gold rose 0.34% to $3,251.24 an ounce. U.S. gold futures rose 1.33% to $3,252.60 an ounce.
(Reporting by Stephen Culp; Additional reporting by Naomi Rovnick and Nell Mackenzie in London)
