Stocks, dollar recover ground after U.S. jobs report

Fri Jan 6, 2017 4:53pm EST
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By Saqib Iqbal Ahmed

NEW YORK (Reuters) - Stocks overcame early weakness and the dollar and U.S. Treasury yields rallied on Friday after data showed U.S. wages rose in December even as hiring slowed, setting the economy up for further interest rate increases from the Federal Reserve this year.

The stronger greenback weighed on dollar-denominated commodity prices, but oil rose slightly on increased buying ahead of the weekend.

Nonfarm payrolls rose less than expected in December, the Labor Department said, but a rebound in wages highlighted sustained labor market momentum that points to stronger growth and could drive the Fed to consider raising rates as early as the first quarter.

"There's still improvement to be made, especially with the labor force participation rate being low, but conditions seem to be close to what the Fed might be happy with," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

MSCI's world index .MIWD00000PUS, which tracks shares in 46 countries, erased most of its earlier losses to trade little changed. U.S. stocks advanced and the Dow Jones Industrial Average .DJI came within one point of hitting 20,000 for the first time ever.

U.S. equities have risen sharply since Donald Trump won the U.S. election in November and while Friday's gains suggested the rally is not yet over, some investors have grown cautious.

"The market's advance is understandable because of the economic stimulus optimism associated with a new Trump presidency," said CFRA chief investment strategist Sam Stovall.

"But parabolic market advances traditionally experience digestion of these gains, and I don't think this time will be any different."   Continued...

A man shelters under an umbrella as he walks past the London Stock Exchange in London, Britain August 24, 2015. REUTERS/Suzanne Plunkett