U.S. stocks staged their first notable rally of 2023 to close the week higher Friday after December employment data showed wage growth decelerated last month. Investors perceived the release as a sign Federal Reserve officials may ease their rate-hiking campaign.
The S&P 500 (^GSPC) jumped 2.3%, while the Dow Jones Industrial Average (^DJI) added 700 points, or 2.1%. The technology-heavy Nasdaq Composite (^IXIC) surged 2.6%. All three major averages were on pace to end the week with losses before Friday’s big gains.
The Labor Department’s final jobs report of 2022 showed the U.S. economy added 223,000 payrolls last month while the unemployment rate fell to 3.5%. Economists had expected readings of 200,000 and 3.7%, respectively.
Employment has moderated in recent months, but hiring remains momentous despite the Federal Reserve’s efforts to quell a tight labor market that has placed upward pressure on wages and contributed to stubborn inflation.
“With over 1.8 unfilled jobs for every unemployed person, investors should expect higher rates for longer after today’s release,” Lazard Chief Market Strategist Ron Temple said in a note. “As long as the labor market remains this tight, the Fed cannot rest assured that inflation will return to its 2% target.”
Meanwhile, the ISM’s non-manufacturing PMI fell below the 50 threshold for the first time since early into the pandemic two years ago. The gauge of services activity in the U.S. fell to 49.6 last month from 56.5 in November. Economists surveyed by Bloomberg expected a print of 55.0.
Beleaguered Tesla (TSLA) pared a loss of as much as 7% earlier in the session after the electric carmaker slashed prices in China following a December drop in deliveries. Shares closed up 2.5%.
The starting price for Model 3 was cut to 229,000 yuan, or around $33,000, while prices on the Model Y have been lowered to 259,900 yuan, or $37,886, according to Tesla’s website.
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