The S&P 500 (^GSPC) climbed 1.1% but was poised for a weekly loss. The Dow Jones Industrial Average (^DJI) jumped 375 points, or 1.2%, while the technology-focused Nasdaq Composite (^IXIC) advanced about 0.8%.
The U.S. economy added 261,000 jobs in October, while September’s reading was upwardly revised to 315,000 from 263,000 previously reported, the Labor Department said Friday. Economists expected a payroll gain of 195,000 last month, according to consensus estimates compiled by Bloomberg. The unemployment rate ticked up to 3.7%.
“Today’s stronger than expected report illustrates the difficult task that still lies ahead for the Fed wrestling a resilient labor market and sticky inflation,” Mike Loewengart, head of model portfolio construction at Morgan Stanley’s Global Investment Office, said in emailed comments. “While the number may be disappointing for investors hoping for a dovish Fed sooner rather than later, keep in mind it was the lowest reading in nearly two years, so there could be signs that the market is slowing.”
Investors have bet that some signs of a cooling labor market would force the Federal Reserve to scale back on its aggressive rate-hiking campaign, but Chair Jerome Powell asserted Wednesday that slight moderations in the data were not enough for a pause on increases, with labor conditions still historically tight.
“Although job vacancies have moved below their highs and the pace of job gains has slowed from earlier in the year, the labor market continues to be out of balance, with demand substantially exceeding the supply of available workers,” Powell said on Wednesday after the U.S. central bank delivered a fourth straight interest rate hike of 75 basis points.
In the third quarter of this year, payroll gains averaged 372,000 per month. Weekly jobless claims, the most timely snapshot of the U.S. labor market, have also come in consistently low, with this week’s reading at 217,000.
“Initial claims are not increasing one bit,” DataTrek’s Nicholas Colas said in a note. “Simply put, there is still no sign that neither aggressive Fed monetary policy nor the tighter financial conditions that it has brought is yet hitting U.S. labor markets.”
Central banks across the globe have moved in lockstep with the U.S. Federal Reserve to proceed with a combative path of monetary tightening, raising concerns about the impact of synchronized rate increases. The Bank of England raised interest rates by 75 basis points on Thursday, while European Central Bank President Christine Lagarde said in recent remarks that rates may need to be raised to restrictive levels to drag inflation back to the 2% target.
While monetary policy has held investors’ attention this week, corporate earnings have continued to rush in. Shares of Block (SQ) surged 16% after the company meaningfully beat estimates on strong performance in its Cash App and Square payment offerings.
Payments peer PayPal (PYPL), meanwhile, saw shares fall 4% after the company slashed its revenue forecast to 8.5% from its prior outlook of 18%, even as it beat on earnings results.
Twilio (TWLO) shares tanked 34% after the cloud communications company missed on earnings and reported softer-than-expected guidance.
Toymaker Funko’s (FNKO) stock plunged 50% after the company reported a big earnings miss and slashed its annual forecast ahead of the holiday season.
Meanwhile, shares of Alibaba (BABA) gained 6ths % along with a rally in Chinese stocks amid speculation the country will halt its strict zero-COVID policy.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc