U.S. stocks rallied to close out the trading week on Friday as the S&P 500 set a closing record for the third time in five days after an upbeat U.S. jobs report and data on Chinese manufacturing eased concerns about slowing global growth. The TSX also put in a strong performance, rising by triple digits, its best day in nearly two months.
Job growth slowed less than forecast in October, as a drag from a strike at General Motors was made up for in other areas of the labor market, while job gains in the prior two months were stronger than previously thought.
“A nice surprise, and also there were upwards revisions for September and August,” said Jeff Kravetz regional investment strategist at U.S. Bank Wealth Management in Phoenix.
“To us that is an indication of the resiliency of the economy this late in the cycle and for today that is what is putting investors at ease and putting them on a risk-on mode here.”
The strong jobs number helped overshadow a report that showed the manufacturing sector contracted for a third straight month.
Along with the S&P’s new high, the Nasdaq eclipsed its July closing record. The S&P has climbed for four straight weeks, its longest streak since February, while the Nasdaq has gained in five straight weeks as quarterly earnings have come in stronger than anticipated and U.S.-China trade rhetoric has appeared to be productive. The Dow sits less than 12 points from a closing record.
Before the jobs report, sentiment was supported by data showing China manufacturing activity unexpectedly expanded in October, easing concerns about a slowdown in demand from the world’s second-largest economy as a result of U.S. tariffs.
The Dow Jones Industrial Average rose 300.86 points, or 1.11%, to 27,347.09, the S&P 500 gained 29.36 points, or 0.97%, to 3,066.92 and the Nasdaq Composite added 94.04 points, or 1.13%, to 8,386.40.
For the week, the Dow rose 1.44%, the S&P 500 climbed 1.47% and the Nasdaq rose 1.74%.
U.S.-China trade news remained supportive for stocks, as Beijing’s state-media Xinhua News Agency reported the two countries have “reached consensus on principles.” Earlier, U.S. Commerce Secretary Wilbur Ross said the “phase one” trade pact with China appeared to be in good shape.
About 76% of the 356 S&P 500 companies that have reported so far have beaten profit estimates, according to Refinitiv data.
However, profit growth forecasts for the next four quarters have been revised lower, even as expectations for a decline in third-quarter earnings have shrunk to 0.8% from 2.2% at the start of October.
Oil major Exxon Mobil Corp rose 3.00% after it beat recently lowered third-quarter profit expectations. The energy sector gained 2.50% as the best-performing S&P sector, and oil prices jumped on trade deal progress.
Qorvo Inc jumped 20.23% after the Apple supplier announced a $1 billion share buyback plan and forecast third-quarter revenue above expectations.
But Pinterest Inc plunged 17.02% after the online scrapbook company missed quarterly revenue estimates.
Canada
The S&P/TSX composite index had its best day in nearly two months by closing up 110.91 points at 16,594.07.
Canadian factory activity expanded at the fastest pace in about eight months, according to fresh domestic data, helping to support the market.
The Canadian dollar traded at 76.01 cents US, compared with Thursday’s average of 75.99 cents US.
Seven of the 11 major sectors of the TSX climbed, led by energy, which increased 3.1 per cent on higher crude oil prices.
The December crude contract was up US$2.02 at US$56.20 per barrel and the December natural gas contract was up 8.1 cents at US$2.71 per mmBTU.
That benefited Encana Corp. and Crescent Point Energy Corp., which saw their shares gain 5.4 and 4.6 per cent, respectively.
Shares in oil and gas producer Pengrowth Energy Corp. tumbled by 75 per cent on Friday after it announced a deal to be acquired by Cona Resources Ltd. for five cents per share and the assumption of debt.
Industrials, technology and health care were also higher.
Materials led on the downside with Barrick Gold Corp. losing 2.3 per cent as the price of gold decreased.
The December gold contract was down $3.40 at US$1,511.40 an ounce and the December copper contract was up 1.5 cents at US$2.65 per pound.
Other safety sectors, including consumer staples, telecommunications and utilities, also fell.
Reuters, with from The Canadian Press