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NEW YORK >> Stocks rose Friday after a strong report on the U.S. jobs market suggested a recession may not be as close as Wall Street feared.

The S&P 500 jumped 1.5% to its latest rally, a nearly 20% rally since mid-October. That Wall Street prime measure of health puts it on the verge of entering a so-called “bull market” despite several challenges listed.

The Dow Jones industrial average added 701 points, or 2.1%, while the Nasdaq composite gained 1.1%.

The index got a boost last month after a report showed employers unexpectedly accelerated their hiring. It’s the latest sign that despite high interest rates, the labor market remains remarkably strong, providing significant support to a slowing economy.

Markets that perform better when the economy is healthy have led a broad rally, including industrial companies, energy producers and banks. ExxonMobil rose 2.3 percent as crude oil prices rose.

Perhaps more telling for markets, the Labor Department’s monthly jobs report showed a slowdown in wage growth even as hiring strengthened.

While that may discourage workers trying to track prices at the register, investors believe that slower wage growth means less inflation in the economy.

This will allow the Federal Reserve to ease its move toward interest rates to reduce inflation. Higher rates do that by slowing the economy and hurting the value of investments, and they’re already hurting the banking and manufacturing industries.

The unemployment rate also rose more than expected last month to a five-decade low of 3.7 percent. This suggests a slight slowdown in the labor market and appears to conflict with the gangbuster employment numbers, whose data comes from a separate survey.

“The reality is probably somewhere in between,” said Brian Jacobson, chief economist at Anx Wealth Management.

“One thing that is surprising is that if you compare the total payroll today with pre-Covid, we still have over four million job vacancies to fill,” he said. “Covid has led to strange times, strange recoveries and even strange slowdowns.

After the report, traders were keenly expecting the Fed to hold interest rates at its next meeting in two weeks. If it does, it will be the first time it hasn’t raised prices in over a year.

The pause in rate hikes will give some breathing room to an economy that has seen manufacturing contracts soar for months in the past. Higher rates hurt many small- and mid-sized banks, in part because customers pulled deposits in search of higher interest rates on money-market funds.

Several high-profile bank failures have shaken the market since March, prompting Wall Street to hunt for other possible weak links. Many under heavy scrutiny gathered following the job report. PacWest Bancorp jumped 14.1 percent to cut its loss for the year to 66.6 percent.

But Fed officials recently cautioned that a pause in June rate hikes does not necessarily mean the end of hikes.

Data from the CME Group indicated traders are expecting the Fed to pause in June and move on interest rates in July. That helped push up Treasury yields.

The yield on the 10-year Treasury rose to 3.69% from 3.60% late Thursday. It helps determine rates for mortgages and other important loans.

The two-year Treasury yield, which moved higher on expectations for Fed action, jumped to 4.50% from 4.34%.

Also helping support Wall Street was the Senate’s final approval late Thursday of a deal that could end the U.S. government’s worst debt crisis. The move is widely expected by investors and the deal will move next to President Joe Biden for his signature.

Lululemon Athletica jumped 11.3% after posting stronger-than-expected profit for the latest quarter, fueled by accelerating sales trends in China and other factors. It raised its earnings forecast for the full year.

MongoDB jumped 28 percent after the database company posted a bigger-than-expected profit. The company says it is confident it will benefit from the enthusiasm surrounding artificial intelligence sweeping the business world.

The frenzy around AI helped the S&P 500 climb to its highest level since August. Navia, whose chips are helping to fuel the move to AI, has grown by 169 percent this year, for example.

It fell 25.4% in the nine months from January 2022 through early October, with big gains for Nvidia and a handful of other stocks the main reason the S&P 500 came so close to escaping the bear market.

A handful of stocks posted the biggest gains for the S&P 500, and critics say that means the index may not be as strong as it seems. Although the S&P 500 is up 11.5% year to date, nearly half of the stocks in the index have lost ground amid falling profits, still high inflation and very high interest rates.

All told, the S&P 500 rose 61.35 to 4,282.37 on Friday. The Dow rose 701.19 to 33,762.76, and the Nasdaq gained 139.78 to 13,240.77.


AP Business writers Matt Ott and Joe McDonald contributed.


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