US Market closes on upbeat note as jobs, services data calm rate hike concerns

The US stock market finished the session sharply higher on Friday, 06 January 2023, after two key economic reports signaling that the Federal Reserve's interest rate hikes are having their intended effect.

At the close of trade, the Dow Jones Industrial Average index spurted 700.53 points, or 2.13%, to 33,630.61. The S&P500 index surged 86.98 points, or 2.28%, to 3,895.08. The tech-heavy Nasdaq Composite Index increased 264.05 points, or 2.56%, to 10,569.29. for the week, Dow and S&P 500 each was up 1.5%. The Nasdaq advanced 1%.

All 11 sectors ended higher along with the S&P500 Index. Materials was the top performing sector, rising 3.44%, followed by information technology (up 3%), real estate (up 2.86%), consumer staples (up 2.71%), and industrials (up 2.69%) sector.

U.S. nonfarm payrolls rose by 223,000 jobs in December, Labor Department data showed, while a 0.3% rise in average earnings was less than the previous month's 0.4%.

In another set of data, U.S. services activity declined for the first time in more than 2-1/2 years in December as demand weakened, with more signs of inflation easing.

Fed officials on Friday acknowledged cooling wage growth and other signs of a gradually slowing economy, with Atlanta President Raphael Bostic hinting at the chance of a quarter percentage point hike at the next policy meeting.

But Huntington's Augustine said the central bank needs to see further slowing of price increases in the December inflation report, due out on Thursday, before deciding whether to slow its next rate hike.

Shares of Biogen rallied 5.2% after the FDA granted accelerated approval to a new Alzheimer's drug. Clinical trials of the new drug showed that it slowed cognitive decline in people with mild symptoms from Alzheimer's disease.

ECONOMIC NEWS: The Institute for Supply Management said its services PMI tumbled to 49.6 in December from 56.5 in November, with a reading below 50 indicating a contraction.

Data from the Labor Department showed non-farm payroll employment jumped by 223,000 jobs in December after surging by a revised 256,000 jobs in November. The Labor Department also said the unemployment rate edged down to 3.5 percent in December from a revised 3.6 percent in November.

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